One of the most deep-seated drivers of our attachment to cash is family influence — an influence that goes back to our first memories of money and what we learned from our parent. Our strongest childhood memories of money usually include savings-related activities, and we also learned to save money from our parents. There is no denying the importance of these values, but they emphasize financial discipline rather than financial growth.
Most Americans learned to value saving from their parents, but they didn’t learn to value investing.
While investing is now accessible for most Americans – the result of Wall Street going to Main Street over the past half century – younger generations see little change in family financial lessons.
Americans feel a more positive connection towards saving than they do towards investing
As adults, we hold onto this deeply positive connection to saving – an activity Americans chiefly describe as “secure” – as opposed to investing, which people mostly view as risky. For many Americans, it seems as if investing represents breaking into that cherished piggy bank, rather than the opportunity to achieve long-term goals such as retirement.
We can untangle Americans’ deep-seated emotions around cash by exploring behaviors learned by more engaged investors. These individuals, regardless of net worth, effectively engage with investing through an intersection of discipline, access to information and advice.
Americans who think of investing the way they think of saving feel more financially secure. In practice, people who describe saving money as investing it into stocks, bonds and funds also have 22% lower cash allocations.
Whether or not Americans invest, they are similarly likely to think investing is complicated. Financial advisors can provide services that will help people overcome a wide array of barriers to investing, including lack of understanding of financial products, confusion about how to diversify effectively, need for a financial plan and more.
Understand exactly how much income your retirement savings can generate. Financial advisors can provide estimates of a person’s monthly income in retirement. BlackRock also offers a free online tool that estimates retirement income based on current age and savings.