Why Gen Y Suffers From Post-Traumatic Stocks Syndrome

Why Gen Y Suffers From Post-Traumatic Stocks Syndrome

Social Security funds are dwindling, and few people today expect pensions to fund their golden years. In other words, saving for retirement through smart investing is more important than ever—especially for those who are just entering the workforce.

Yet, according to a recent study by investment management firm MFS, 40% of Generation Y'ers who were polled agreed with this eyebrow-raising statement: "I will never feel comfortable investing in the stock market."

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And among those who are currently investing, 54% feel overwhelmed by the choices available to them, and 47% tend to put off making decisions about their investments, MSN Money reports.

A Case of Post-Traumatic Stocks Syndrome

So what's behind this phenomenon? One theory that's being floated: It may very well be the economic climate that Gen Y was born into. The first members of this generation to enter the workforce did so during the dot-com bubble. And just as they began investing in their early 20s, the housing bubble then burst—and the country fell into a deep recession.

RELATED: Gen Y Off the Savings Track

Thanks to all this turmoil, members of Gen Y have what MSN Money dubs "post-traumatic stocks syndrome." According to 2010 research conducted by T. Rowe Price, nearly one in five investors between the ages of 25 and 35 hold 80% of their assets in cash. So why is this such a potentially harmful practice? While being cautious when it comes to your assets isn't inherently a bad thing, avoiding risk altogether can lead to lower gains over the long run—and that can negatively impact your nest egg.

RELATED: What’s Your Risk Tolerance?

What Gen Y Is Doing Right With Investing

One way Gen Y is killing it with their portfolios: They're asking for help.

Compared to generations before them, Gen Y is much more open to embracing the idea of reaching out to financial professionals for guidance. And this could do wonders for their bottom line, since an advisor can help them feel more comfortable about the risks involved with investing—and even help them let go of their fear.

RELATED: 9 Types of Financial Advisers: Which One Is Right for You?

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