3 Reasons Millennials and Gen Z are Turning to Self-Directed IRAs

Estimated reading time: 3 minutes(Last Updated On: April 22, 2022)

A big shift in the investing world is coming. As younger generations begin inheriting family wealth, more and more millennials – and even members of Gen Z – are understanding the importance of growing their money and saving for their financial future. The millennials and Gen Z of today hold more economic power than any generation that came before them, earning more, saving more, and even investing earlier. According to Fortune.com, 31% of millennials started investing before age 21, compared to 23% of generations that came before.

Millennials are also the largest workforce in U.S. history, earning money for today and for retirement. Add the transfer of tens of trillions of dollars through inheritance, which is already underway, this powerful generation is ready to take back the control of their finances. And that is where Self-Directed IRAs (SDIRAs) come in. With the freedom and opportunities Self-Directed IRAs offer, these younger generations are seeing the benefits of these accounts, and here’s why.

1. Eager to Learn

As technology increases, it becomes easier and easier to access education and information from multiple different sources. Forum sites allow for discussions of topics with other people who share similar interests, and these conversations can lead to even more desire to discover and learn. In the past, SDIRAs were not very well known and the popularity of these accounts has significantly increased over the past 30 years. With more millennials discovering SDIRAs and the benefits these accounts can offer, they are learning that it may be easier than they thought to move away from the traditional investing methods they have always been taught.

2. Perspective Shift

As Millennials and Gen Z live through different situations, there continues to be a shift in the way they view financial security. Millennials have seen the struggles of their parents, watching them live paycheck to paycheck and invest their money the traditional approach. They are seeing that the cookie-cutter methods simply weren’t working anymore, and that new investment outlets – like crypto currency, real estate and oil and gas – were providing better rewards.  Self-Directed IRA, offering the ability to invest into these alternative assets, became much more sough after.

3. Want to take back control

The most common reason Millennials and Gen Z are turning to SDIRAs is the control. Self-Directed IRAs truly put the control back into the hands of the investor. Investing vehicles like IRAs and Roth accounts at traditional custodian limit the investment choices to stocks, bonds, mutual funds, etc. and usually, those investments are sold by financial advisors. Self-Directed IRAs are different, though. They allow the investor to find an investment of their choosing, and then tell their representative where to invest the money – a strategy younger generations prefer. When younger investors asked if they would ever choose to work with the same financial advisor as their parents, 88% responded saying they would never even consider it. This goes to show that Millennials and Gen Z are ready to take back the control of their money and put it into assets they know and understand.

It’s never too early to start saving for retirement, and when investing in a vehicle that is comfortable to you, you can greatly help grow your wealth faster and greater. Though we’ve only listed just a few reasons here, the benefits are endless. If you ever have questions about how to get started with a Self-Directed IRA at Quest, call us at 855-FUN-IRAs or schedule a free consultation with an IRA Specialist HERE.

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