Why millennials will never be wealthy

Why millennials will never be wealthy

Why you should start investing in your 20s to be wealthy later in life.

Millennials, also dubbed as the “avocado toast generation”, or the “unluckiest generation”, are financially worse off than previous generations. In fact, millennials are the generation facing the scariest financial future since the Great Depression, already having experienced 6 economic crises in their lifetime, including 3 large-scale stock market crashes (1990’s dot-com, 2008 GFC and March 2020 Covid-19 crash) and two recessions before the age of 40.

It is frequently stated that millennials have earned more money than any other generation their age, so what makes them poor? The answer is simple: the affordability and cost of living crisis, the housing crisis, and increasing student debt. These factors combined make financial wellness as a millennial difficult – never mind starting the process of investing in your 20s.

The affordability and cost of living crisis

Economic writer Kevin Drum highlighted a US Census Bureau report on inflation-adjusted median family income for millennials, Gen X, and boomers. It exhibits that millennial households at the age of 40 — the oldest of the generation — earn $85,000 on average per year — more than what Gen X ($77,000) or Boomers ($70,000) earned at the same age. According to Drum, family income in the same age group may have increased due to a higher number of two-earner households, as an increasing number of women is joining the workforce compared to 50 years ago. When comparing the median personal income in the same age group for all three generations, it is clear that millennials continue to earn more. The average 40-year-old millennial earns $49,000, which is $10,000 more than the previous boomer generation. Millennials, on the other hand, have less wealth than previous generations at their age, despite higher wages and more education.

According to recent data, when Boomers were around the same age as millennials, they held roughly 21% of America’s wealth, compared to millennials’ 5% share presently. This can be explained by the rise in the cost of living outpacing wage growth. Some services and goods have become much more costly over the last 21 years, with college tuition, healthcare, and childcare greatly surpassing hourly wage gains. In June 2021, the CPI inflation rate in the United Kingdom was 7.3%, while wage growth was 2.5%. In March 2022, inflation rose by 9.1%, but wage growth was only 2.5%. According to the most recent statistics from June 2022, average UK pay increases are at 4%, which is less than half of the country’s inflation rate (9.1%).

Looking at the economy through a cost-of-living lens helps explain why, even years after the Great Recession ended, nearly two out of every five Americans struggle to come up with $400 in an emergency. It provides an explanation as to why every fifth American is unable to make their monthly bill payments in full and why, despite the country’s wealth, an unexpected boiler repair expense, parking ticket, or medical expenditure may devastate many American households. One in every three homes is now considered “financially vulnerable.”

The housing crisis

In the US as well as the UK, the term “housing crisis” has entered the national lexicon in a spectacular way in recent years. This provides the impression that the housing problem is a recent issue, while in fact, we are only now suffering its worst consequences, with too few properties on the market and those being too expensive. This problem is prevalent, owing to a mix of reasons such as stagnant wages, stringent building codes, and underinvestment in construction, among others. In the United Kingdom, the average house price is 65 times greater than it was in 1970, while income is just 36 times higher. Historically, the average house price in the US is 5 times the cost of the average annual household income. This ratio exceeded 7 during the 2006 housing boom. The ratio stands at 8 this year. Millennials are thus half as likely as their parents to own a home.

The debt crisis

Following the cost of living and housing crisis, comes student loan and credit card debt, a trillion-dollar burden put on the shoulders of young students. To be precise, a $1.7 trillion stone, climbing 6% year-over-year, and 116% in a decade. It is now a greater burden on households than car loans or credit card debt. 70% of students in the US and approximately 43 million Americans are trapped working off their student loan debt loads, eliminating the college wealth premium and weakening the college earnings premium for younger Americans. In the United Kingdom, things are looking gloomy for millennials. According to YouGov research, 42% of millennials list debt repayment as one of their key expenses, with one-fifth of 25 to 34-year-olds spending more than 60% of their wage on the same day it reaches their account. Debt typically varies between $20,000 and $25,000, with monthly payments ranging between $200 and $300 — though many students owe much more.

Why you should start investing in your 20s

Today’s millennials are failing to retain control of their finances, and it’s not their fault. They have been impacted the most by the current chain of devastating economic events, while tackling the challenge of paying off debt and amassing wealth in time for retirement. In fact, studies have shown that most millennials won’t be able to retire before 75. About only half of millennials are invested in the stock market, compared to 54% of Gen Z, partially explained by the fact that millennials joined the workforce at the start of the 2008 financial crisis, which may have left them wary of the US financial system, particularly the stock market. It’s more important than ever to understand how the market works and how it can help you guarantee a wealthy future, especially after growing up in the aftermath of the Great Recession, stagflation, and persistent recession fears.

For example, many new investors do not realise that market dips are huge opportunities, as you may buy stocks considerably cheaper. With a long-term investment strategy, you shouldn’t be concerned by short-term market volatility; what matters is the sum you’ve acquired throughout your lifetime. It is never too late to start investing, in fact, the best time to start investing is now. Aside from your regular daily responsibilities (work, family, and leisure), managing your investments can create a lot of stress over time, and the overall psychological ramifications of the stock markets can have a significant impact on your lifestyle. As a result, finding a method that does not interrupt your work-life balance is crucial.

Tips for investing in your 20s

By starting with investing in your 20s, you’re more likely to achieve financial freedom long-term. The earlier you start investing, the more time you have to accumulate better returns and the sooner you can start taking more investment risk, which can lead to substantial gains. Here are some tips when getting started with investing in your 20s:

  • Start investing as early as possible to unleash the power of compound interest.
  • Make risk your friend by investing in stocks, rather than putting your money in an under-performing savings account. Remember, with the right decision-making tools, high-risk opportunities can be worth it.
  • Ask if your employer will contribute, as some companies do offer contributions to group funds.
  • Use an investment platform like One-Signal to help you make good investment decisions.


While there are many obstacles to building wealth in today’s world that previous generations didn’t need to contend with, by investing in your 20s – or as early as possible – you can actively work towards securing your financial future, no matter the state of things. With a good investment strategy and the support of tools and technology that enable data-driven decision-making, you can make informed investment choices that will ultimately bring you increased returns in future.

At One-Signal, we take care of your trading decisions, so you don’t have to. We provide daily long or short signals for the US market, summarising the most complex information into one word in one email per day. All you have to do is follow the signal and if you are not confident enough to trade, we’ve got you covered with our execution services, where we take care of everything — no need to trade yourself.

One-Signal has generated 30.5% on average per year between 2005 and Q1 2022, compared to its benchmark index returning 8.4%. In Q1 2022, we have returned 13.4%, compared to our reference index, the S&P 500, which was down -5.2%.

Learn more about how we can help you improve your investment decision-making, or contact our friendly team for more information.

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