Younger investors may have learned the wrong lesson from the past decade. From Bridgeway’s annual report:
The following graph with data from the Investment Company Institute demonstrates a phenomenon we hear about frequently:
Investors are more risk-averse than they were a decade ago. What is most surprising to us at Bridgeway, however, is the breakdown by age: elderly investors have not significantly changed their appetite for risk, while younger investors’ risk appetite has plummeted — to the point that it is slightly lower than that of the baby boomer generation. This seems upside down. Financial advisors typically preach that younger investors can afford to take on more risk and should do so. Something to ponder.