What millennials should keep in mind amid market volatility

  • Generation Y members are already more likely to put their money in real estate, cash and gold before investing in the stock market, according to a recent Bankrate survey.
  • Experts say millennials might not be as skittish as they're framed.
Millennials doing taxes
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The market sell-off and Monday's dramatic (though brief) 1,500-plus-point drop may have given millennials flashbacks to a formative experience: the Great Recession.

Rianka Dorsainvil, a certified financial planner, said she was recently working with a married couple, both in their 30s, who were hesitant about investing in the stock market — although they had around $15,000 available to do so.

They couldn't shake what happened in 2008. How job prospects were dim when they graduated college, how their parents' retirement accounts shrunk in the downturn.

And finally, last week the couple decided they were ready — just as the stock market began its descent. (Now they've decided to hold off for the foreseeable future.)

"People in their 20s are going to look back at this in 30 to 40 years and it's just going to be a little blip. The Eagles winning the Super Bowl is going to be a much bigger deal."" -Walter Updegrave, Editor, RealDealRetirement.com

A few days into the month, the S&P 500 has lost $1 trillion in market value, and the Dow Jones industrial average's point skid on Monday was the steepest in history.

Even before this past week, millennials — those born between the 1980s and early 2000s — were already not too cozy with the stock market.

About 57 percent of millennials say it's unlikely they'll ever invest in the stock market, according to a study by Allianz Life. Members of that generation are also more likely to put their money in real estate, cash and even gold before investing in the stock market, according to a recent survey by Bankrate. Baby boomers, in comparison, invested their money first in real estate and then in the stock market.

Grant Sabatier of the blog Millennial Money, said this sell-off could be a chance for more young people to get into the market, some of whom maybe couldn't afford to before.

"A lot of younger investors say, 'Are stocks too expensive? Should I buy?'" Sabatier said. "Any type of correction is a positive thing. We're investing for the long term, so I rather get in on the value now."

Current market volatility actually poses the least threat to millennials, who aren't likely to need their retirement-account savings money for decades, he said.

This dip should serve as a reminder to millennials that you shouldn't invest money in the stock market that you'll need in the near future. If you play the "long game," as Sabatier recommends, you'll come out on top.

"Look at the performance of the stock market over the last 100 years," he said. "The Dow has returned on average 7.2 percent a year compounded."

Walter Updegrave, editor of RealDealRetirement.com, said millennials have often been framed as too conservative in their investing when in fact they are just being smart.

"Millennials are investing in a rational way," he said, pointing to a report by the Employee Benefit Research Institute that showed about three-quarters of people in their 20s had roughly 80 percent of their 401(k) savings in equities.

He also agreed that millennials have the advantage of time.

"People in their 20s are going to look back at this in 30 to 40 years and it's just going to be a little blip," Updegrave said. "The Eagles winning the Super Bowl is going to be a much bigger deal."

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