As Investor Optimism Continues to Improve, Generation Y & Z Take Action

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As Investor Optimism Continues to Improve, Generation Y & Z Take Action

TD Ameritrade survey finds young investors more likely to have increased the amount they are investing

What new college grads need to do today to start investing for their future


OMAHA, Neb.--(BUSINESS WIRE)-- Economic optimism among retail investors of all ages has rebounded consistently in each of the last three quarters, according to the latest quarterly retail investor sentiment survey from TD Ameritrade Holding Corporation (NYS: AMTD) . Fifty-seven percent of all investors surveyed said they are optimistic in their outlook for the U.S. economy, up from 46 percent last quarter and 43 percent in each of the two previous quarters.

While the survey suggests sentiment has been improving, and TD Ameritrade's Investor MovementIndexSM (IMXSM) continues to show that investors who are engaged in the markets are positioning their portfolios in a bullish manner, many long-term investors who have been on the sidelines remain there. Just 15 percent of investors said they have invested more money in the stock market over the last six months, up from 10 percent in July 2012. Fifty-five percent said they invested the same amount and 19 percent said they invested less.

But, the youngest investors - Generations Y and Z (ages 35 and younger) - are doing more than their elders. According the sentiment survey, these youngest investors are:

  • Most likely to have increased the amount of money they're investing in the market over the last six months (23% compared to 15% of all investors)
  • Most likely to have increased their risk tolerance over the last six months (14% compared to 8% of all investors)
  • Most likely to have contributed the maximum amount allowed to their IRA for the 2012 tax year (45% compared to 32% of Gen X and 39% of Boomers)
  • Significantly more optimistic about their future portfolio performance than older generations (74% compared to 59% of all investors)

"Whether it's their outlook for the U.S. economy or how they are positioning their portfolios, it's clear that investors have been more bullish, and young investors have been leading the way," said Tom Bradley, president of retail distribution for TD Ameritrade, Inc., a broker dealer subsidiary of TD Ameritrade Holding Corporation. "It's encouraging to see these young investors taking advantage of opportunities to invest and save for their futures. They're heeding the advice of older generations who have said so many times that it's never too early to start."

Tips for New Grads
Many in Generation Z will graduate college this year, and as they accept their diplomas, saving for retirement may be the last thing on their minds, when it should be one of the first. Why? Starting now can allow young professionals to pad their growing nest eggs with the power of compounding interest.

Here's how:

  • A new grad starts investing $100 per month, beginning at age 21, and continues that monthly investment for the next 20 years, stopping at age 41. The total investment before interest is $24,000.
  • Assuming an 8 percent annual return, compounded monthly, that $24,000 will become $471,358 by the time the grad retires at age 67.

Likewise, starting late could cost thousands — or even hundreds of thousands — of dollars. Here's how:

  • A new grad waits until age 41 to begin investing $100 per month and continues that monthly investment for the next 20 years, stopping at age 61. The total investment before interest is again $24,000.
  • However, assuming the same 8 percent annual return, compounded monthly, the nest egg will only total roughly $95,000 at age 67.

In this case, getting a late start cost the grad more than $375,000.

Gen Z: Ask yourself whether you would rather invest $100 a month starting at 21, or $1,000 a month at 41. Simple steps, like investing early can help new grads take advantage of the power of compounding, and they may ultimately enjoy more freedom and flexibility later in life.

For more information on the survey, visit the TD Ameritrade Newsroom which includes a wide selection of past research studies capturing the pulse of retail investors and independent registered investment advisors. For the latest news and information about TD Ameritrade, follow the company on Twitter, @TDAmeritradePR.

The TD Ameritrade Quarterly Investor Sentiment Survey measures the opinions of retail investors on news and issues relevant to today's markets. The Investor Movement Index (IMX), a proprietary, behavior-based index created by TD Ameritrade, measures and aggregates the historical trading activities of TD Ameritrade clients and lends insight into how bullish, bearish or neutral they may be about the market.

AMTD-G

About the Survey
1,022 investors participated in an online survey conducted by Research Now on behalf of TD Ameritrade Holding Corporation from Jan. 2-10, 2013 and offered their views on economic conditions and outlook for the market in general. These investors have at least $10,000 in investable assets, own securities in brokerage accounts, are 18 years or older, are involved in managing their portfolios, and have traded securities at least once in the past 12 months. The 1,022 survey respondents represent a random sample of investors selected from a consumer panel of individuals in the U.S. who have access to the Internet. The margin of error in this survey is ±3.0%. This means that in 19 cases out of 20, survey results based on 1,089 respondents will differ by no more than 3.0 percentage points in either direction from what would have been obtained by seeking the opinions of all eligible individuals in the U.S. who are online. Research Now and TD Ameritrade Holding Corporation are separate, unaffiliated companies and are not responsible for each other's products and services.

About TD Ameritrade Holding Corporation
Millions of investors and independent registered investment advisors (RIAs) have turned to TD Ameritrade's (NYS: AMTD) technology, people and education to help make investing and trading easier to understand and do. Online or over the phone. In a branch or with an independent RIA. First-timer or sophisticated trader. Our clients want to take control, and we help them decide how - bringing Wall Street to Main Street for more than 36 years. TD Ameritrade has time and again been recognized as a leader in investment services. Please visit TD Ameritrade's newsroom or www.amtd.com for more information.

Brokerage services provided by TD Ameritrade, Inc., member FINRA (www.FINRA.org) /SIPC (www.SIPC.org) /NFA (www.nfa.futures.org)

About Research Now
Research Now is the leading global online sampling and online data collection company. With over 6 million panelists in 38 countries worldwide, Research Now enables companies to listen to and interact with real consumers and business decision makers in order to make key business decisions.



TD Ameritrade Holding Corporation
For Media:
Kim Hillyer, 402-574-6523
Director, Communications & Public Affairs
kim.hillyer@tdameritrade.com
@TDAmeritradePR
or
For Investors:
Jeff Goeser, 402-597-8464
Director, Investor Relations & Finance
jeffrey.goeser@tdameritrade.com

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