Generation X investors are sometimes overlooked in conversations about generational investing, but they account for 65.2 million individuals in the U.S. and face unique challenges. Often considered the “sandwich generation,” many are raising young children while also caring for aging parents and they’re on track to be the first generation worse off than their parents when it comes to retirement.
Compounding those issues, many Gen Xers still have vivid memories of the Great Recession of 2008, and those memories are shaping the way they see and respond to current economic circumstances. “Many people remember the financial crisis and are afraid that we’re going to have another financial crisis,” says David Rae, founder of DRM Wealth Management LLC. Heemphasizes however that the memory of the 2008 crisis also means that many Gen Xers are afraid of repeating the mistakes they made during that time. “Many also remember that they were scared of getting back into the market and missed out on doubling and maybe even tripling some of their investments.” As a result, helping Gen Xers navigate ongoing volatility is as much about putting the situation into perspective as it is about providing opportunities to minimize risk.
Key Takeaways
Gen Xers account for 65.2 million individuals in the U.S. and often face unique challenges.
They are on track to be the first generation worse off than their parents when it comes to retirement.
For these clients, sticking to a regular rebalancing schedule may be more important than rebalancing as a response to ongoing volatility
Advice for Gen X Investors Facing Unique Challenges
While some Gen X investors are focused on finding opportunities in the current market, most are more concerned about minimizing risk and finding ways to weather the downturn. Blair duQuesnay, investment advisor representative at Ritholtz Wealth Management, explains that emphasizing the importance of diversification can help to ease client anxieties. “Rather than trying to second guess who are going to be the winners and the losers in the coronavirus pandemic, we know that diversification is our only free lunch and we’re not going to make changes in the heat of the moment and let emotions take over how we’re feeling while we’re going through a crisis,” she explains.
In addition to diversification, David Flores Wilson of Planning to Wealth, explains that because Gen Xers are in a different position than those who are retired or nearing retirement, sticking to a regular rebalancing schedule may be more important than rebalancing as a response to ongoing volatility. “We’re rebalancing on schedule, so the conversations have been about whether they should add money to this market that’s currently sitting on the sidelines,” he says. In order to do that, it’s important to take a look at clients’ overall financial plans, and determine where new opportunities may be emerging.
The Bottom Line
While Gen Xers face unique challenges when it comes to their portfolios and their overall financial circumstances, they also have unique advantages including a longer investment horizon and experience weathering periods of significant economic volatility.
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