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Survey: Most millennials turn to cash for long-term investing

Monday - 7/21/2014, 11:02am  ET

Cash (Alex Wong/Getty Images)
A new survey finds that millennials prefer to invest their money in cash rather than the stock market. (Alex Wong/Getty Images)

WASHINGTON -- A new survey is leading some experts to say millennials are not making the best choices when it comes to their long-term investments.

Millennials are most likely to choose cash as their preferred way to invest money they won't touch for at least 10 years, according to a new Bankrate.com survey.

Thirty-nine percent of people surveyed in the age group say cash options -- such as savings accounts and certificates of deposit -- are their favorite long-term investment strategies.

The number of millennials who choose cash is three times higher than the number of investors who picked the stock market as their favorite long-term investment plan.

"The preference for cash and aversion to the stock market among young adults is very troubling considering this age group has the biggest retirement savings burden. They won't get there without being willing to assume a little short-term price risk in their long-term money," Bankrate.com's chief financial analyst Greg McBride said in a news release.

Earlier this year, head of investor insights for UBS Wealth Management Emily Pachuta told Bankrate that millennials are playing it safe.

"They have a Depression-era mindset largely because they experienced market volatility and job security issues very early in their careers, or watched their parents experience them, and it has had a significant impact on their attitudes and behaviors," Pachuta said.

Overall, Americans are risk-averse when it comes to how they invest their money.

One in four Americans prefer cash investments for money they won't need for at least 10 years. Cash slightly edged out real estate, which 23 percent said they preferred. Stocks rounded out the top three options with 19 percent of the vote.

Here is a breakdown of investor preferences, according to the survey:

  • Cash investments: 25 percent
  • Real estate: 23 percent
  • Stock market: 19 percent
  • Gold or other precious metals: 14 percent
  • Bonds: 5 percent
  • None of these/other: 6 percent
  • Don't know: 8 percent

To gather its data, Princeton Survey Research Associates International conducted telephone interviews with 1,000 adults living in the continental U.S. between June 2 and 6. There is a margin of error of plus or minus 3.6 percentage points.

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