Millennials are proving to be a conservative investment group.
While often portrayed in the media as risk takers who are more likely to invest in cryptocurrencies than mutual funds, the latest data shows the opposite to be true.
New data from the Bank of Montreal shows that millennials are focusing on contributing to their RRSPs. Since 2016, according to the bank’s ninth annual RRSP Study, the average millennial’s RRSP holdings have increased by 87% to $28,821.
And this generation is apparently not as interested in the traditional portfolio split of 60% in stocks and 40% in fixed income. Millennials, according to Bank of Montreal, are more interested in alternative investments such as real estate, private equity and private debt. The bulk of their RRSPs — two thirds — is in cash.
The RRSP study cites saving to take advantage of the Home Buyers’ Plan, which allows a $25,000 withdrawal from an RRSP to pay for a first home, as the reason for the large cash holdings of millennials. (Unless the amount withdrawn exceeds $25,000, it is not reported as income).
The study also showed that millennials are investing more at a younger age than the older Baby Boomer and Generation X generations ahead of them. The study says that the loss of traditional pension plans is the likely reason why millennials are taking saving for retirement into their own hands at a younger age.
