Millennial investors are stereotyped as having short attention spans and an aversion to investing.
Is this an accurate representation?
Doug invites Shannah Game, CFP® , a specialist in millennial investors, to discuss the difference between millennials and other investors.
Listen to two Certified Financial PlanningTM Professionals debate how retirement and investment goals are different for millennials. Shannah reaches out to this financially conservative generation and offers some tools that make investing and saving a little easier. She also has a simple exercise that you determine why you need to “know your number.”
3 types of mutual funds
Are you familiar with all 3 types of mutual funds? Doug explains the differences in the 3 types of funds (index funds, open end funds and closed funds) and elaborates on closed end funds.
What are the pros and cons of closed end funds? What makes them a good choice for some investors, but not others?
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Interview With Shannah Game
Why is it that buying a home isn’t a priority for millennials? Why are millennials shying away from investing their money? Shannah Game answers these questions and shares some great tools and apps to aid in investing and budgeting.
Douglas Goldstein: I am very excited to have on, The Goldstein on Gelt Show, Certified Financial Planner Shannah Game, who like me, helps people with their personal finance.
But Shannah has a specialty. Shannah is looking to revolutionize the way millennials think, act, and feel about money.
I’ve got to tell you, Shannah, I don't deal as much with millennials as you do because I deal often with older people, but everyone is getting to that age hopefully.
What is different about millennials in handling their money than other people?
Millennials and Their Attitude towards Money
Shannah Game: It is an interesting demographic.
It is the largest demographic to come along, and they stand to inherit the greatest amount of wealth transfer that we've ever seen, at least in U.S. history.
But I'm imagining that’s pretty much world history. I think what’s really unique about millennials is that they’ve grown up in this technology era.
They’ve grown up with Facebook and Twitter and Snapchat, and all of these different mediums to communicate. It really has changed the way we deliver information to millennials.
Their attention spans are also very small, I was going to say like a nut, but very small.
We're all guilty of that, regardless of what age we are right now, but because their attention spans are so short, it's really hard for them to get information about important subjects like money.
You have to be really innovative in how you approach and teach this demographic. And for me, I love that challenge.
I’m on the border of being a millennial and a Gen Xer, and I approach it like I’m your big sister. I’ve been through the same things.
I’m a certified financial planner, but that doesn’t mean I have not made money mistakes along the way. If I can infuse any tools and inspire the millennials to take action, even take a little step with their money, I know-.
Douglas Goldstein: You're describing people who have a shorter attention span than they should.
As you know, someone who’s going to be investing for the long term has to have some patience.
It’s not so easy and day-to-day, it’s not that exciting. In fact, the only exciting queue we usually get is when the market crashes.
How do you guide someone, or what are the tools that someone needs in order to say, “I'm going to put a little bit of money in. I know it's not going to make any difference today but over the long term it's going to help”?
How do you help them with it?
Tools That Guide Millennials with Their Finances
Shannah Game: I think with investing, when it comes to millennials, we could spend a whole hour talking about that.
They’ve seen what happened in the United States in the 2008-2009 crash, and a lot of the millennials are super conservative and they’re not investing.
I think that is the scary part because we both know how important it is.
The earlier you start, potentially the better off you’re going to be down the road. I think there are a lot of tools now that millennials can use.
There's Apps, there is Robo-advisors, there's lots of mechanisms to help millennials at least get a foot in the water with investing.
Douglas Goldstein: How are these tools working for them? The tools have been around for a while; millennials have been around for a while.
Hopefully, some of them are working and not living at home anymore. Are they succeeding? Is this stuff helping?
Shannah Game: I think that what it’s doing is bringing an awareness; an approachability to investing.
I think a lot of millennials are thinking, “I don't want all my money to go away like what happened in the stock market crash, but I don’t even know what I’m doing, and I don’t know who to trust with the advice.”
I think the Apps are helping millennials in a very basic way. If they can start putting away $20 a month or $25 a month, it’s helping them have some sort of familiarity with investing that hopefully then will inspire them.
The theory is good.
Douglas Goldstein: The theory is good, but I'm still curious. When you talk to them, are they really doing it? And frankly, not to knock $20 a month, because that’s a great start, but it’s not going to get you to retirement unless you get a huge inheritance one day.
Shannah Game: I don't know the exact split of how many of them are doing it or not doing it, but the reaction that I’ve heard is a lot of these tools are helping it feel again more approachable for millennials.
I think it’s a conversation that they can have with their friends, about these different Apps or these different robo-advisors or things like that.
I think it's removing a little bit of the stigma.
But yes, I think that that’s going to be an interesting conversation, to see what’s going to happen with investments in the future. There are a lot of millennials out there who, even with all the technology and Apps, are just saying, “I don’t want to lose half of my money. I'm not even going to get in the game.”
We both know what kind of impact that can have over your future, and how limited your choices could be down the line if you don't start somewhere.
Douglas Goldstein:I want to give people some real takeaways from this discussion today about what should they do, if they want to start planning.
Let’s say to buy a house or to pay off some of their loans or ultimately to become wealthy, maybe even to retire. What would be the first step you would suggest someone do right now?
The Interesting View That Millennials Have about Buying a Home
Shannah Game: I talk about this a lot. It’s a process I call, “Know your numbers” and it’s really simplistic in nature and yet regardless of income, I think everybody skips this.
We’re traditionally taught to do a budget. We do it at the beginning of the month and at the end of the month we go, “Wait, that didn’t work out so well. I'll try that again.”
Then you have the same results over and over again, but the process that I try to teach people is, unless you dive in and really understand your expenses, where every single dollar is going, you don’t have control over making these money changes that you need in order to pay off debt or buy a house, or whatever your goal may be.
There’s power and awareness of knowing where your money’s going, and I always find this shocking.
You probably have the same reactions that everybody thinks they know where their money’s going, until they actually do the exercise for a couple of months and go, “Wait a minute, I didn’t realize I was spending this much on that or whatever it may be and...”
Douglas Goldstein: The key thing is to write it down, to record it somehow. Do you have one favorite App or tool that you like to use for that?
Shannah Game: I am a big fan of an online tool, and they have an App as well called, “You Need a Budget,” which helps you goal plan and have some control over the money that’s coming in, and then ultimately the money that's going out.
Douglas Goldstein: We spoke before about a goal, so let’s go into the goal thing.
We spoke about different goals that people might have.
Whether it’s retirement or paying off debt, and one of them is simply buying a home; the American dream.
I've spoken to millennials who say, “I don't know why people keep telling me that. I don't want to own a home. I don't see that as a goal.”
Do you think that is something that's important as a financial goal, and therefore people have to start saving and improving their credit score when they're young?
Shannah Game: That's a great question. I think that the thing that we always need to remember is that with goals there is no one size fits all.
There's no manual that says, “Okay, you graduate college. You get X job, you get married, you buy the house, you have kids.” I think millennials are really starting to debunk those myths.
They're living at home longer, mostly because they have a lot of student loan debt and things like that. But I find that millennials are delaying that home buying purchase and having a question mark around it. They’re saying, “Is this something that I really want to do?”
I will say the trend that I'm definitely seeing is a lot of millennials are interested in real estate investing with Arabian B and all of these popular social platforms that are coming up.
That's more of the conversation that I hear from millennials, wanting to skip right over buying a home and going right into, “Let me get an investment property.”
Douglas Goldstein: Interesting. They see real estate as an investment, but they don't necessarily feel it's important for them to own a home because you can always rent.
Fascinating. Shannah, I know you have a lot of ideas for millennials that you cover. Unfortunately, we are just about out of time. In the last few seconds, tell me how can people follow you and follow your work?
I've got all sorts of great tips and information there, and you can listen to all my podcast episodes as well.
Douglas Goldstein:Fantastic. Shannah Game, thanks so much for taking the time.
Shannah Game: Thank you.