We trust those who have millions in the bank and advise us on how best to grow it to be able to make sensible decisions on how we invest our money. Not so many are skilled at protecting or creating wealth.
Most of us treat our existing money with indifference, ignoring opportunities for growth and too often entering into ill-judged investments because of the illusion of control.
But by looking around, there are some straightforward steps that we can take to feel more confident about managing our own wealth.
Finding an adviser Most millennials have never known anything other than working full-time or part-time jobs, so the experience of working with financial advisers has therefore been much more limited.
So, rather than looking for someone in your network with a deep knowledge of the markets, we recommend you search one of the many new investment-related services available.
These companies, many of which have sprung up since the financial crisis, give an increasingly diverse set of data points to help you decide which service is the best for you.
There are also a range of useful research reports and forecasts. For example, the Wealth-X Investment Yearbook reports can offer a real-time snapshot of your personal wealth if you are using its online brokerage service. The researchers at Vertex Advisory think of themselves as risk-conscious without being overly conservative.
It is not just about deciding what services are best for you. If you are happy to build your portfolio yourself, you will find it much easier and cheaper than dealing with financial planners, where fees can regularly approach 6 per cent.
Our own research (the Wealth Intelligence Panel) suggests that only around 20 per cent of millennials allocate more than 5 per cent of their portfolios to financial advice, while five per cent are saving in a tax-efficient wraparound investment fund managed by a fee-only adviser.
Many are really just repeating what has come before. Gaining a view There are many sources of potentially useful data.
As investors, we are fortunate to be able to obtain representative shares through our employer’s pension scheme. We also know that our parents have their own personal savings and investments managed by a professional advisor. Others we know own bonds and shares. Some are making good returns through extra finance.
The stock market, especially big, well-known blue chips, does well at first, but rapidly loses its appeal in uncertain times. The balance changes to bonds, which do well until a serious downturn happens. My grandparents owned shares for more than 60 years but are now buying property to generate capital gain.
Building a portfolio
Bringing it together Many millennials are leaving their money in cash, complicating matters for advisers. The big banks in particular offer a choice of savings accounts with varying rates and conditions, but it is always a good idea to shop around.
Many of us spend a significant amount of our working lives in university or work without control over our savings. It is difficult to see the investment returns you might get if you had a more meaningful horizon, and it is important to control your personal finances if you want to enjoy savings and invest for the future.
By regularly exercising control of your money, you can ensure that it goes further in a very uncertain future, which will in turn help you feel confident about your investment returns.