ABC4 Spoke with Greg McBride, Chief Financial Analyst at Bankrate about the findings. In summary, he said that their data is mostly “encouraging.” “Investors were not more inclined to sell than they were to buy in the face of volatility and inflation,” which McBride says is good news.
The Bankrate study categorizes different generations’ intent regarding their retirement investments. Their findings indicate that Generation Z and Millennials are more likely to increase their retirement investments despite a volatile market, while Generation X and Baby Boomers are less likely to do so.
McBride expresses surprise that Millennials and younger generations are intending to save more. “For years and years Millennials were reluctant to invest in the stock market,” says McBride, referencing how many of them had a “first row seat” to the 2008 financial crisis and the dot-com bubble crash. He says that even in the years of economic growth after the financial crisis, Millennials still demonstrated a reluctance to invest in the stock market, which is now changing.
Regarding older generations not intending to increase their retirement investments as much as younger generations, McBride says that it is relatively normal. He continues by saying that as generations grow closer to retirement age, they generally “dial down risk” in their investments. In other words, older generations are investing relatively similarly to how they usually do despite unique market conditions.
When asked about the implications of these findings on the health of the larger economy, McBride acknowledges that long-term investors “hanging in there and buying helps cushion markets in the short term,” but that these findings will have a much more dramatic impact on individual household wealth in the long term. For him, this study is indicative of “a good wealth building mindset” among younger generations that will benefit them in the long run.
“Patient and disciplined investors have consistently been rewarded for hanging in there,” says McBride and confirming that good saving habits appear to be consistent despite a rapidly changing market.
When asked if these findings can shed light onto the future of the stock market that has been in rapid decline since mid-April 2022, McBride says that it’s hard to shed definitive light on the subject with what we know. More so than investing trends, he says that “stock prices follow earnings. The economy is slowing, and corporate profits show that.” The same goes for slowed consumer spending, according to McBride.
Finally, when asked for his advice for individuals trying to save for retirement, McBride tells investors to not “let short-term volatility distract you from long-term objectives.” Rather than try to time the market, McBride says that it is “always good to save more” regardless of the current state of the market. He recommends that investors continue to try to follow good investing practice, like maxing out 401k and IRA contributions for the year.