Millennials Could Have Better Financial Wealth Than Baby Boomers, ODU financial Instructor Says
March 21, 2017
By: Noell Saunders
Millennials may struggle to have the same financial security afforded to their parents but with smart investment choices, it's possible.
"If millennials make the right decisions they could have just as much financial security as their parents or even more than their parents," said Andrew Cohen, a financial instructor at Old Dominion University.
The financial health of the millennial generation is not in good shape, a new data analysis suggests. Young Invincibles, a national non-profit advocacy group, analyzed economic statistics for 25 to 34 year-olds in 2013 and compared them with the same age group in 1989. When baby boomers were young adults, their net worth was double that of today's young adults, who earn $10,000 less than their counterparts did in 1989, according to the study.
Cohen, who manages the Gregory A. Lumsden Trading Room and Research Lab at the Strome College of Business, said high student loan debt is one of the biggest problems keeping millennials behind the curve.
He suggests looking at the economic value of an institution and choosing a school that is more likely to provide aid or scholarships than just choosing a school for prestige value.
"If you are going to a school and not getting any student aid or any type of scholarship, then you are coming out with thousands of dollars in debt and that's really hard to climb out of, "Cohen said.
Before coming to Old Dominion, Cohen had a 15-year Wall Street career, but lost most of his wealth working for the notorious Bernie Madoff who was convicted of defrauding scores of investors.
He said not having a lot of debt and living below his means enabled him to get his life back on track. Cohen teaches his students to make wise decisions that could help in the future.
"I want to teach my students about all the good choices I made and how to avoid the mistakes I made as well," he said.
Cohen's list of other ways to save include:
- If you have debt, pay the highest interest rates first (credit cards, student loans);
- Make sure to always pay credit card balances in full or the high interest rates will keep compounding;
- "Pay yourself first" by investing in pre-tax savings accounts, IRAs and 401k programs;
- Needs vs. Wants (decide what you need to spend money on and cut down on what you want to spend money on);
- Cook at home;
- Have a budget;
- Participate in less costly activities (i.e. hiking and other sports rather than going to bars and clubs) and;
- Housing (Get a roommate or live at home until debt is manageable or paid off)
Cohen also advises millennials to look at the stock market for investment options once debt is paid off.
"Rather than trying to pick a hot stock to buy, purchase an exchange-traded-fund, an S&P 500 fund or something that's diversified so you don't have to worry about individual stock risk," he said. "This way, you're investing in the overall market which should give you a nice return in the long run."