South African millennials those aged between 18 and 34 are proving to be better savers than previous generations, yet they are failing to invest for the long term. This is according to recent research commissioned by Old Mutual Unit Trusts into the financial behaviour of employed millennials, which found that while 69 percent of them have a savings account, only 44 percent are investing in pension or provident funds.
They are more likely to seek financial independence and personal fulfilment compared to their parents.
This is according to the latest Old Mutual Millennial report, which was commissioned to better understand the financial behaviour of employed millennials compared to older generations.
The report found that 24% of millennials are currently invested in a unit trust versus only 2% among older generations with 57% saying they invested in a unit trust with the purpose of increasing their net worth and 47% saying they looked to invest to reach financial freedom.
“This shift in priorities speaks to the bigger differences in the way millennials and older generations view money and the unique challenges they face,” said Elize Botha, MD of Old Mutual Unit Trusts.
Complete financial freedom and the flexibility it offers us to travel, or to be our own boss when the income from your assets exceeds your expenses. Only by reducing debt in tandem with investing in investment vehicles which offer growth assets and returns can millennials hope to reach this goal,” she said.
This is particularly worrying when considering, for example, that older generations who are currently retiring still do not have sufficient funds. Despite many of these people having spent most of their working years with one employer, banking their retirement savings over 30 to 40 years, there is still a significant shortfall.
A generation of millennials or young people, on the other hand, who are not looking to spend much time in one company, may be tempted to withdraw retirement savings.