BMO Wealth Management Report: Millennials More Conservative, Least Likely to Focus on Long-term Investments

• BMO offers tips to help overcome behavioural biases when investing
• Top investment goals

TORONTO, Nov. 7, 2017 /CNW/ - BMO Wealth Management today released a report examining how Baby Boomers, Generation-Xers and Millennials differ when they invest.

The report – "Make better investment choices by understanding and reducing bias" – found that Millennials are notably more conservative investors compared to Baby Boomers.

Millennials are less inclined to buy and hold investments for the long term (32 per cent) compared to Generation-Xers (43 per cent) and Baby Boomers (44 per cent). Also, more Millennials said they would put money aside and decide later what to do with it (31 per cent) than both Generation-Xers (22 per cent) and Baby Boomers (22 per cent).

The financial crisis of 2007-2008 occurred just as Millennials were starting to take on more financial responsibility, leaving them more cautious and less secure about their financial matters. Baby Boomers, however, have had strong average returns, preparing them to ride out the ups and downs of the market.

"Biases can lead to flawed investment decisions," said Chris Buttigieg, Director, Wealth Institute, BMO Wealth Management. "Understanding how they arise from your background and life experiences can help you make better investment decisions to achieve your financial goals."

Financial goals for each generation

The BMO Wealth Management report also examined the top investment goals for each generation: more than half of those surveyed cited retirement as their top financial goal. Millennials agreed that saving for retirement is important, however they cited this objective as a top priority only half as often (32 per cent) as Baby Boomers (63 per cent) and Generation-Xers (62 per cent). Short-term goals, such as saving for a vacation (29 per cent) and saving for a home upgrade or purchase (27 per cent), followed and were the next highest cited by Millennials.

BMO offers the following tips for overcoming bias

Adopt a portfolio approach: A portfolio approach spreads your investments out over a number of areas. A more diversified portfolio, with a greater variety of securities, helps reduce risk.

Consult a financial professional: A financial professional can help shape your portfolio to your desired outcomes, reducing the impact that biases may create. Removing biases from investment decision making will help deliver long-term risk-reward outcomes for your portfolio.

Improve financial literacy: The BMO Wealth Management Report found that Millennials find investing too complicated, as a result of a lack of understanding of investment terminology, not understanding markets, and not knowing about investment options. A financial professional can also provide information and guidance that will help increase financial literacy specific to any areas of concern. 

Follow a wealth planning strategy: A well-constructed wealth plan allows you to have a better idea of how much you should save, and how your investment choices can affect how funds could grow. A wealth plan is designed to balance your ability to save with the investments that you make to achieve your personal goals.

To view a copy of the full report, please visit www.bmo.com/wealthreports.

To follow the discussion about this BMO Wealth Report on Twitter, follow @BMO.

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About BMO Financial Group
Established in 1817, and currently marking its 200th year of operations, BMO Financial Group is a highly diversified financial services provider based in North America. With total assets of $709 billion as of July 31, 2017, and more than 45,000 employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, Wealth Management and BMO Capital Markets.

SOURCE BMO Financial Group

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