Many young investors have been staying away from stocks, apparently spooked by a decade of poor returns and the recent - and painful - bear market. In fact, a survey last year by the Investment Company Institute found that Generation Y investors (born between 1977 and 2001) report lower risk tolerance than Generation X (born between 1965 and 1976).
But companies can make a difference when they enroll new employees automatically into employer-sponsored retirement plans and set target-date funds as the default investment. Vanguard-administered 401(k)s are more likely to have such features than they were in 2003. The result, according to a new Vanguard report, is that twentysomething participants now hold larger allocations in stocks than the age group before them.
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