The trend that is hurting millennials' chances of success

Pedestrians cast shadows on the crosswalk near the headquarters of the Bank of Japan in Tokyo December 19, 2014. The Bank of Japan maintained its massive monetary stimulus on Friday and offered a brighter view of the economy, clinging to hope that joint efforts with Prime Minister Shinzo Abe to revitalise the economy will prod companies into boosting wages and investment. REUTERS/Issei Kato (JAPAN - Tags: BUSINESS

There's one trend that is compromising the millennial generation's chances of success in life, and it's getting very little attention. Image: REUTERS/Issei Kato

Jayson DeMers
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People love to hate millennials, just as a decade or two ago people loved to hate Gen Xers, and so on. Every generation criticizes the one that came after it.

Among the usual complaints are millennials' sense of entitlement, over-reliance on digital communication, and lack of respect for work ethics and professional culture.

While it's wrong to generalize an entire generation based on often-anecdotal evidence, there are some valid trends and characteristics that are more common among those born between the late 80s and early 2000s.

Most external criticisms focus on the trends that have outward effects. For example, the fact that millennials are poorly informed about news events compared to other generations is significant because it makes them less savvy voters, and makes them more irritating in certain conversations.

But there's one trend that's compromising the millennial generation from the inside, and it's getting very little attention.

The risk aversion of millennials

Are millennials entitled? Selfish? Lacking empathy? Maybe. But one thing's for sure: They don't like taking risks. In fact, they're the most risk-averse generation since the Great Depression, when people had the perfect reason to avoid taking risks in investments.

Why is this?

1. Economic turbulence

Millennials grew up or entered the workforce amidst the 2008 economic crisis, and have likely seen multiple points of rallying and falling in the stock market.

The past 20 years or so have been extremely volatile, leading millennials to believe that the stock market is an inherently risky place where you could lose everything — and jobs can be swept out from under you at any minute. This makes millennials inherently more aware of and averse to risk.

2. Corporate distrust

Millennials are less trustful of corporations than generations that came before them. They trust advertising less because of how bombarded they are, and they've witnessed the effects of corporate greed on the economy. They therefore may be less likely to invest in stocks or trust major corporations (and our economic system in general).

3. Choices everywhere

It's a world where technology evolves at an astounding rate, and there are hundreds, if not thousands, of options for almost anything you could want, from jobs to investments to apps to dates.

There are tons of online choices, all of them offering some degree of instant gratification, and millennials never want to stick with any one choice for too long. It's a never-ending cycle of transition and instant gratification, and anything deviating from that cycle is perceived as excessively risky.

4. Student debt

Student debt is at record levels, as is college attendance. The result is a greater portion of the population wrestling with student debt, and higher levels of debt itself to make matters worse.

This adds pressure on millennials to find a consistent stream of work and makes them less capable of investing significant capital into projects, stocks, or other investments. They're starting in the workforce with heavier monthly expenses, and they tolerate financial risk worse than generations past.

Why it's killing millennials' potential

In some ways, risk aversion can be beneficial. It's encouraging more millennials to invest in and trust in themselves more than they trust a corporation, a stock, or any other kind of investment.

However, there are ways that this risk aversion is throttling millennials' potential:

1. Investment gains

Millennials who avoid the stock market are missing out on significant potential investment gains. Indeed, many millennials favor investing in CDs and money market accounts, or just saving in basic savings and checking accounts.

With lower interest rate investment vehicles, it can become impossible to outpace inflation, and eventually they end up losing money rather than gaining it.

2. Jacks-of-all-trades

Part of millennials' risk aversion involves a degree of job hopping, attempting to do as much as possible without fully investing in any one company or career. This can be beneficial, as it lends itself to skill development and experience in a number of different areas, but it also prevents millennials from following a trajectory of growth in any one career, and may limit them in their future income potential.

Is risk aversion a good thing or a bad thing? Personally, I think risk aversion is beneficial in some ways, but has a broader effect of limiting your true potential. Only by taking risks and plunging into opportunities do you stand a chance of seeing higher gains — and this is especially true when you're young and nimble enough to recover from risks that go wrong.

If you're a millennial in the workforce, or if you're considering investing, I encourage you to challenge yourself in taking more risks; start a business, make investments, or quit your job in pursuit of something better. There's no better time for your risk tolerance, and you have everything to gain.

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