NEW YORK (MainStreet)If there are no mistakes in life, only lessons to be learned, as Mark Twain said, the lessons learned from the global financial collapse five years ago seem to have been most taken to heart by younger investors. A new study commissioned by Fidelity Investments says that Gen Y investors born from 1981 to 1988 learned more and have taken the most positive action as a result of the financial crisis.
The report says that 81% of Millennials now consider themselves more knowledgeable about their finances, compared to 66% of older generations. And 55% of Gen Y feels more confident about financial matters, compared to 47% of their seniors. The digital generation is also saving more, as 64% of Gen Y now say they have a savings plan in place, compared to just over half (54%) of their elders.
In fact, while more than one-quarter (26%) of Gen Y investors surveyed said they have become deeper in debt over the past five years, 71% have begun to contribute to an emergency fund and nearly half (48%) have increased the balance of their emergency savings. But Boomers seem less prudent: while 21% said their debt load has increased, just over half (52%) have started an emergency fund and only 29% have actually increased their "rainy day" savings.
"While the crisis served as a wake-up call for investors of all ages, this study found Gen Y may have experienced the most positive change," said John Sweeney, executive vice president of Retirement and Investment Strategies at Fidelity Investments. "Gen Y remains surprisingly confident despite suffering investment losses, and especially given that many also saw the impact the crisis had on their parents, who were approaching or in retirement. Rather than over-reacting, Gen Y has taken a more deliberate approach to their finances, recognizing the need to assume control of their spending and investing habits, and showing a willingness to do things differently. These are important factors when it comes to weathering any financial challenge."