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College Students and Recent Grads, Featured, Investing, News, Retirement

Where the Wealthiest Millennials Stash Their Money

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

There’s been much talk about millennials being fearful of the stock market. They did, after all, live through the financial crisis, and many are shouldering record levels of student loan debt, while grappling with rising fixed costs.

The truth is that historically, young people have always shied away from investing. A whopping 89% of 25- to 35 year-old heads of household surveyed by the Federal Reserve in 2016 said their families were not invested in stocks. That’s only two percentage points higher than the average response since the Fed began the survey in 1989.

MagnifyMoney analyzed data from the 2016 Survey of Consumer Finances, conducted by the Federal Reserve, to determine exactly how older millennials — those aged 25 to 35 — are allocating their assets.

In 2016, wealthy millennial households, on average, owned assets totaling more than $1.5 million. That is nearly nine times the assets of the average family in the same age group — $176,400. Included were financial assets (cash, retirement accounts, stocks, bonds, checking and savings deposits), as well as nonfinancial ones (real estate, businesses and cars).

While the wealth of each group was spread across just about every type of asset, the biggest difference was in the proportions for each category.

To add an extra layer of insight, we compared the savings habits of the average millennial household to millennial households in the top 25% of net worth. We also took a look at how the average young adult manages his or her assets to see how they differ in their approach.

Millennials and the stock market

Despite significant differences in income, we found that both sets of older millennial households today (average earners and the top 25% of earners) are investing roughly the same share of their financial assets in the market – about 60%.

Among the top 25% of millennial households, those with brokerage accounts hold more than 37% of their liquid assets, or about $224,000, in stocks and bonds and an additional 26%, or $154,000, in retirement accounts. Meanwhile, just over 14% of their assets are in liquid savings or checking accounts.

By comparison, the average millennial household with a brokerage account invests a little over $10,000 in stocks and bonds, or 22% of their total assets, and they reserve about 21% of their assets in checking or savings accounts.

Millennial households invest most heavily in their retirement accounts, accounting for around 38% of their financial assets, although they have only saved $18,800 on average.

Wealthy millennials carry much less of their wealth in checking and savings, compared with their peers. Although wealthier families carry eight times more in savings and checking than the average family — $84,000 vs. $10,300 — that’s just roughly 14% of their total assets in cash, while for the ordinary young family that figure is around 20%

The Fed data show that those on the top of the earnings pyramid are able to save far more for the future, even though they’re at a relatively early stage of their careers.

Across the board, older millennial families hold the greatest share of their financial assets in their retirement accounts. Although that share of retirement savings is smaller for wealthier millennial families (26% of their financial assets, versus 38% for the average older millennial family), they have saved far more.

When looking at the median amount of retirement savings versus the average, a more disturbing picture emerges, showing just how little the average older millennial family is saving for eventual retirement.

The median amount of money in higher earners’ retirement account is $90,000 (median being the middle point of a number set, with half the available figures above it and half below). But the median amount is $0 for the typical millennial family, meaning that at least half of millennial-run households don’t have any retirement savings at all.

Millennials and their nonfinancial assets

Most of millennial households’ wealth comes from physical assets, such as houses, cars and businesses.

While nearly 60% of young families don’t own houses today, the lowest homeownership rate since 1989, homes make up the largest share of the family’s nonfinancial assets, Fed data show.

For the average-earning older millennial family, housing represents more than two-thirds of the value of its nonfinancial assets — 66.4%. On average, this group’s homes are valued at $84,000.

The homes of rich millennial households are worth 4.6 times more, averaging $470,000 — though they represents a lower share of total nonfinancial assets — 50%.

Cars are the second-largest hard asset for the average young family to own, accounting for about 14% of nonfinancial assets.

While rich millennials drive fancier cars than their peers — prices are 2.4 times that of average millennials’ cars — their $42,000 car accounts for just 4.5% of their nonfinancial asset. In contrast, they stash as much as 31% of their asset in businesses, 20 percentage points higher than the ordinary millennial.

It’s worth noting that young adults in general are not into businesses. A scant 6.3% of young families have businesses, the lowest percentage since 1989, according to the Fed data. (Among those that do have them, the businesses represent just over 11% of their total nonfinancial assets.)

The student debt gap

Possibly the starkest example of how wealthy older millennials and their ordinary peers manage their finances can be seen in the realm of student loan debt.

A significant chunk of the average worker’s household debt comes in the form of student loans, making up close to 20% of total debt and averaging $16,000. In contrast, the wealthiest cohort carries about $2,000 less in student loan debt, on average, and this constitutes just about 4.6% of total debt.

With less student debt to worry about, it’s no surprise wealthier millennial families carry a larger share of mortgage debt. About 76% of their debt comes from their primary home, to the tune of $233,500, on average. This is 4.5 times the housing debt of a typical young homeowner.

In some cases, the top wealthy have another 11% or so of their total debt committed to a second house, something not many of their less-wealthy peers would have to worry about — affording even a first home is more of a struggle.

When is the right time to start investing?

For many millennials the answer isn’t whether or not it’s wise to save for retirement or invest for wealth but when to start. Generally, paying off high interest debts and building up a sufficient emergency fund should come first. Once those boxes are ticked, how much young workers invest depends on their tolerance for risk and their future financial goals.

“It’s never too much as long as you’ve got money for the emergency fund, and as long as they are funding their other goals not through debt,” says Krista Cavalieri, owner and senior advisor at Evolve Capital in Columbus, Ohio.

The biggest mistake that Cavalieri has seen among her young clients is that very few have been able to establish an emergency fund that will cover at least three to six months’ worth of living expenses.

Kelly Metzler, senior financial advisor at the New York-based Altfest Personal Wealth Management, said older millennials may not be able to save outside of retirement accounts yet, which can be a concern if they want to buy a house or have other large purchases or unexpected expenses ahead.

Cavalieri said that’s because young adults’ money is stretched thin by the varies needs in their lives and the lifestyle they keep.

“Their hands are kind of tied at where they are right now,” she said. “Everyone could clearly save more, but millennials are dealing with large amounts of debt. A lot of them are also dealing with the fact that the lack of financial education put that in that personal debt situation.”

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Shen Lu
Shen Lu |

Shen Lu is a writer at MagnifyMoney. You can email Shen Lu at shenlu@magnifymoney.com

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Investing, Reviews

Fidelity Review 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

With a whopping $6.9 trillion in assets under management, Fidelity is one of the country’s largest broker-dealers. That kind of size and power may seem like a detriment to some, but Fidelity’s focus on investor value, long-term planning, and fair and transparent pricing makes the Boston-based giant one of the industry’s more likable brands.

Fidelity offers an extensive array of investment products, including hundreds of proprietary mutual funds, index funds and exchange-traded funds (ETFs), and access to thousands of competitor fund investments. Its brokerage platform lets you trade international stocks, stock options and shares of initial public offerings. The firm also offers margin accounts and short selling capabilities for sophisticated investors. There is investing guidance available when you need it as well as 24-hour support. The best part? Lately, Fidelity has been on a mission to reduce the fees and expenses associated with being an investor.

Fidelity
Visit FidelitySecuredon Fidelity’s secure site
The bottom line: It’s not an overstatement to say Fidelity has something for every investor, with trading costs and account minimums that can’t be beat.

  • Full-service broker with a strong brand reputation
  • Extensive options for all investor types
  • Low or no fees and commissions on most products

Who should consider Fidelity

With much to offer, Fidelity is a great fit for many investor types. Beginner investors will appreciate the amount of guidance Fidelity offers to help you set a goal, create an investment strategy, and understand the benefits and risks of different asset classes. Once you’re ready to invest, Fidelity offers mutual funds with no minimum investment and no fees as well as no-fee brokerage accounts.

For index fund investors, Fidelity has four funds with 0% expense ratios and a roster of offerings that beat even low-fee giant Vanguard on price. Trading stocks or ETFs on the regular? Fidelity has low-cost trades, access to tons of research and a great platform for active traders. One company study found that even Fidelity’s bond prices are more competitive, saving investors an average of $14.55 per bond.

Fidelity fees and features

Current promotions

Get up to 500 free trades for two years when you fund an eligible account. The number of free trades is determined by the size of your deposit.

Stock trading fees
  • $4.95 per trade
Account minimum
  • $0
Tradable securities
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
  • Futures / commodities
  • Forex
  • Crypto-currency
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $0 full account transfer fee
  • $0 partial account transfer fee
  • $0 inactivity fee
Commission-free ETFs offered
Mutual funds (no transaction fee) offered
Offers automated portfolio/robo-advisor
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • 529 Plan
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Custodial Uniform Gift to Minors Act (UGMA)/Uniform Transfer to Minors Act (UTMA)
  • Custodial IRA
  • SEP IRA
  • Solo 401k (for small businesses)
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
  • Guardianship or Conservatorship
Ease of use
Mobile appiOS, Android, Fire OS
Customer supportPhone, 24/7 live support, Chat, Email, 190 branch locations
Research resources
  • SEC filings
  • Mutual fund reports
  • Earnings press releases

Strengths of Fidelity

  • Low-cost trading. Considering its size and infrastructure, you might not expect Fidelity to offer a competitive commission rate of $4.95 per trade as well as no-commission trades on select ETFs. E-Trade and TD Ameritrade will cost you $6.95 per trade. Charles Schwab also offers $4.95 trades, but Fidelity edges ahead with lower margin rates for traders with large debt balances.
  • No-fee investing. The company made a bold move in 2018 by offering a handful of index funds with 0% expense ratios, no fees and no minimums.
  • Mutual funds. Fidelity offers more than 200 proprietary mutual funds, representing a diversity of asset classes and investment strategies. More than 100 of the firm’s funds currently have four- or five-star ratings (out of five) by Morningstar based on risk-adjusted returns. You also can access more than 10,000 competitor mutual funds, along with tools to help you screen funds according to features, ratings, returns, expenses and more.
  • Research and planning. When it comes to research, Fidelity hits the mark in multiple ways. As an asset manager, Fidelity’s global research is extensive. More than 400 analysts around the globe cover over 2,600 companies and generate tons of research. For the average investor, Fidelity offers information to help make stock trading decisions, build a fund portfolio and learn about IPOs. There are lots of tools and calculators for everyday financial planning as well.

Drawbacks of Fidelity

  • High minimums for new investor promotions. Fidelity offers between 300 and 500 free trades for two years when you open a new account with a minimum of $50,000 to $100,000. To be fair, these minimums are lower than those required for similar promotions from competitors such as Charles Schwab, E-Trade and TD Ameritrade, but it’s a hurdle for the average new investor.
  • Slow customer service. Overall, Fidelity gets fairly high marks for customer service, with its focus on investment guidance and education. But with a company this size, there are bound to be a few negative reviews. Fidelity’s tend to focus on the customer service and speed. Service representatives can be slow to respond to complaints, money transfers can take weeks, and many customer communications are sent through the mail, according to some customers’ comments.

Is Fidelity safe?

Fidelity uses sophisticated technology to safeguard client accounts and transactions. Accounts at Fidelity are encrypted with two-factor identification, requiring an extra step of replying to a text message when it comes to sensitive transactions. Voice recognition technology is used to authenticate your identity over the phone. Fidelity’s systems are under 24/7 surveillance, from security at local branches to monitoring transactions for identity theft and protecting Fidelity’s website with the industry’s strongest firewalls.

Fidelity accounts also are FDIC-insured for up to $250,000 and SIPC-insured for up to $500,000 per account.

Final thoughts

To be a successful investor, it helps to have the right tools. It also helps to understand exactly what you’re paying for so you don’t lose too much of your investment earnings to commissions and fees. Fidelity provides both to investors, which is meaningful for a company that’s been around for more than 70 years.

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Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Melissa Phipps
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Melissa Phipps is a writer at MagnifyMoney. You can email Melissa here

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Investing, Reviews

Charles Schwab Review 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Charles Schwab has been known as a discount broker for decades, and its online brokerage outfit maintains that reputation. But don’t think just because you’re not paying a lot that you don’t get a lot. For a competitive trading fee, you’ll receive great customer service, solid execution, an easy-to-navigate website with a sophisticated trading platform, and a wealth of research and educational tools. It’s really hard to go wrong with this venerable broker.

Charles Schwab
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The bottom line: With competitive pricing and excellent tools, Schwab is a great choice for any level of investor.

  • Trading platforms and tools for every level of investor
  • Excellent customer service
  • Low trading fees

Who should consider Charles Schwab

Schwab is going to do right by any level of investor. Beginners should love its extensive educational resources and its responsive customer service, while advanced investors should love its sophisticated trading platform. All investors will love its competitive pricing, with the benefits of a full-service broker.

Cost-conscious investors should love Schwab not just for its trading fees but also for its research and plethora of commission-free ETFs and no-load mutual funds. Anyone looking for a complete experience at a bargain price will feel right at home here.

Charles Schwab fees and features

Current promotions

500 free trades with a qualifying net deposit of $100,000

Stock trading fees
  • $4.95 per trade
Account minimum
  • $0
Tradable securities
  • Stocks
  • ETFs
  • Mutual funds
  • Bonds
  • Options
  • Futures / commodities
Account fees (annual, transfer, inactivity)
  • $0 annual fee
  • $50 full account transfer fee
  • $25 partial account transfer fee
  • $0 inactivity fee
Offers automated portfolio/robo-advisor
Account types
  • Individual taxable
  • Traditional IRA
  • Roth IRA
  • 529 Plan
  • Joint taxable
  • Rollover IRA
  • Rollover Roth IRA
  • Coverdell Education Savings Account(ESA)
  • Custodial Uniform Gift to Minors Act (UGMA)/Uniform Transfer to Minors Act (UTMA)
  • Custodial IRA
  • SEP IRA
  • Solo 401k (for small businesses)
  • SIMPLE IRA (Savings Incentive Match Plan for Employees)
  • Trust
  • Guardianship or Conservatorship
Ease of use
Mobile appiOS, Android
Customer supportPhone, 24/7 live support, Chat, Email, 346 branch locations
Research resources
  • SEC filings
  • Mutual fund reports
  • Earnings press releases

Strengths of Charles Schwab

  • Competitive trading fees and no minimum: Schwab makes it easy for those with little coin to get started in the investing game. Schwab’s pricing at $4.95 per stock trade (and $4.95 plus $0.65 per contract for options) puts it right at the standard for low-cost full-service brokers. Plus, its $0 account minimum means you can get rolling with even less. That’s a solid deal for all the other extras Schwab provides, including research and a professional trading platform. Compare that pricing to Fidelity at $4.95 per trade, while TD Ameritrade, E-Trade and Merrill Edge sit higher at $6.95.
  • Extensive research and educational tools: Speaking of research, Schwab offers a lot of it. From market commentary to stock screeners, advanced charting to Schwab stock lists, the broker offers many resources that allow you to ferret out interesting stock ideas. All of that is aided by stock pages with news, press releases and SEC filings to help you with your primary research. You’ll also receive free research from Morningstar, Ned Davis, Credit Suisse, CFRA and others. It’s a wide range of well-regarded reports. Meanwhile, those just getting started will benefit from online courses and modules that get you up to speed on how to invest.
  • Customer service: Need someone on the phone at 3 a.m.? Schwab can handle that. The company offers phone service 24 hours a day, seven days a week. But if you don’t need that level of service, Schwab also offers web chat and email. Plus, while Charles Schwab is known for its discount online service, the company also has more than 340 branches around the U.S., so you can stop by for a full consultation. You really can interact in any way that works for you.
  • Low-cost funds: Schwab has done a lot over the years to make investing low-cost, and its current selection of exchange-traded funds (ETFs) and mutual funds follows that tradition. The broker offers more than 250 no-commission ETFs, and these funds have no early redemption fees. You won’t have to guess which funds are covered, either, as the broker provides an easily searchable list that helps you sort for the kind of fund you’re looking for and provides details on the expense ratio and performance.Schwab doesn’t stop there, offering around 7,300 no-load mutual funds. These funds are sold without a sales charge (otherwise known as 12b-1 fees). But Schwab makes mutual funds even more investor-friendly by offering more than 4,000 with no transaction fee. So these are all savings that can be rolled into your investments.
  • Sophisticated trading platform: Schwab’s basic trading platform is completely serviceable — offering smooth, no-frills order entry that works if you’re entering a one-off order or not trading frequently. But for advanced traders who need efficiency, Schwab also offers a more robust platform, StreetSmart Edge.StreetSmart Edge is available on the web or as a downloadable app, and it includes free streaming data, a customizable trading layout and tools. It also provides the ability to expand the platform to multiple monitors. The app provides a stream of CNBC, and an all-in-one trade ticket allows traders to enter multiple order types and securities in just one window. Real-time news and screeners allow you to hunt for profitable ideas, while real-time trading alerts let you move on an idea immediately.

Drawbacks of Charles Schwab

  • Difficulty qualifying for new account bonus: While many brokers offer a nice bonus for any new trader, with Schwab you’ll have to deposit $100,000 to get it. But then Schwab rolls out the red carpet, with 500 free stock or options trades that are good for up to two years. Still, for that kind of deposit, you can sign up for 100 free stock trades every month from Merrill Edge, though without options trades. However, there is a more modest bonus available: If you can get a friend to refer you to Schwab and you open a new account, you can pocket a $100 bonus.
  • Pricey foreign stock trades: Pricey stock trades might not be a deal breaker, but if this is a must-have for you, then you’ll be better off somewhere else. Schwab charges at least $100 or 0.75% of the principal, with no limit, on stock trades placed directly on foreign exchanges, and you won’t be able to place an online or automated phone order. It’s important to note that this pricing does not include foreign stocks traded on American exchanges. However, if you’re looking to buy a foreign stock on the over-the-counter market, you’ll need to cough up an additional $50 foreign transaction fee, though you can place these trades online or via automated phone order.

Is Charles Schwab safe?

Charles Schwab has been around since 1971 and numbers 11.5 million active client accounts. Plenty of investors trust Schwab because it’s done right by them, and they’ve entrusted the company with about $3.4 trillion in assets under management. The brokerage is a member of the Securities Investor Protection Corporation (SIPC), which protects investors’ assets up to $500,000 per account (including up to $250,000 in cash only) if the brokerage is unable to return the assets. Investors still can lose money in the market, of course, because those investments are subject to risk.

Final thoughts

For a very reasonable trading fee, investors receive the full gamut of research, customer service, trading platforms, low-cost funds and a well-organized web interface. While many brokers are trying, it’s difficult to beat the total package that Schwab offers investors, and it’s simply hard to go wrong.

Schwab ranks among the best of the full-service brokers, and its most comparable peers include Fidelity Investments, Merrill Edge and TD Ameritrade, though the latter two charge higher trading fees.

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Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

James F. Royal, Ph.D.
James F. Royal, Ph.D. |

James F. Royal, Ph.D. is a writer at MagnifyMoney. You can email James here

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