For example, I have a pretty good idea how much money I stand to inherit when my parents pass away. My dad just turned 86. My mom is 73. Here’s hoping the inevitable doesn’t happen for a good 20 or 30 years (knock on wood!). But it’s going to happen. Even if I don’t run around thinking about it every day, the relative certainty of receiving what will probably be somewhere in the low-six figures plays into my long-term financial planning.
The young acquire wealth by inheriting or earning it. Already more than a third of America’s labour force is millennial and they have been the largest cohort since 2016 (even though some are still in education). Bank of America Merrill Lynch reckons that, worldwide, their earning power will rise by nearly three-quarters in 2015–30 as more start work and others gain seniority.
As a proud member of Generation X (I missed being a millennial by six years), people in their 20s and 30s generally inspire me. They keep me focused on the present and what I want to accomplish in the future, using the past as little more than an informed lens into how to be better and help make it all happen.
First and foremost, it’s just another example that we should not place our personal finance and investing focus on traditional conceptions of retirement. If I am pretty confident, I’ll receive, say, $250,000 by the time I’m 65 via inheritance, I should work this assumption into how I spend, save, and invest over the next 20 years.
I could consider that money gravy. Because who knows? My parents could blow it, have less wealth than I think they do, or have mortgage-related debt I don’t know about it. In this scenario, you don’t want to count on this money.
TD Ameritrade investors “have been doing a pretty good job choosing technology stocks,” said Kinahan. “In this last month, Apple was one of the stocks that stood out in terms of millennial clients compared to our overall client base and Apple performed pretty well in that time frame.”
If you know you’re going to inherit money — even if you can’t be sure when — it’s going to change how you handle money in the here and now. It might be a cold thing to think about. But the fact is people die. When this happens, offspring often receive financial windfalls — be it cash or a home they can sell for cash or close to it.
I know my old crappy work has value. If nothing else, it is a stepping stone to where I am today. A little higher. A little better. So I won’t hate it. I’ll value it for providing me the opportunity to get better. I’ll respect it. I’ll be grateful for it.
I regret briefly jumping on the bandwagon that lamented a surge in millennial interest in the stock market this past Spring into Summer. I reconsidered my position and realized that this dissing of young people by mostly older people (white men, in particular) isn’t helpful or nuanced.
Inheritance flows are set to speed up. The population structure in most rich countries bulges outwards for the baby-boomer generation and then again for their children, many of whom are millennials. Every five years $1.3trn in investible assets, or 5% of the stock, passes down the generations in America. The pace of the wealth transfer will probably double by 2036–40 as boomers die. According to Cerulli Associates, a research firm, millennials will inherit $22trn by 2042.
It’s a somewhat psychological thing. If you’ve read my writing more than once, you know I’m obsessed with the psycho-emotional components of how people act and react with money.
Young investors took some fliers. But they also bought pandemic plays — from Apple to Amazon and Peloton to Zoom — that will stand the test of time and, by and large, turn out to be solid long-term investments. It’s no different, in theory, than your baby boomer parents buying companies such as Coca-Cola and Emerson Electric 50 years ago.
In May of 2020, CNBC published one of dozens of stories detailing the millennial move into the stock market. They were doing — no doubt — some dumb things, such as day trading, chasing momentum stocks, and speculating on bankrupt or near-bankrupt stocks:
In other words, as old people (such as our parents) die, young people (such as Gen Xers and millennials) — all things equal — inherit their money. For many investors, say under age 50 with living parents, this changes the game.
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