X-pedited Investing

With the Internet and plenty of time, Gen Xers are jumping into the investment game with the goal of early retirement ... at 40?

October, 2000

When Cindi John was in college she took an economics class, hoping for financial enlightenment. But after a class project on the stock market, she was still scratching her head in confusion.

That was 1975. Today’s college students are a different breed altogether. Armed with as much information as humanly possible, generations X and Y are jumping into the stock brigade and taking aim at early retirement.

In a 1997 survey conducted by the Employee Benefit Research Institute (EBRI), 19 percent of Gen Xers polled say they have saved more than $50,000. In addition, the Xers led all other generational groups with a 110 percent growth in 401(k) participation from 1983 to 1993.

John has learned a few new things since college and has since become an investment representative with Edward Jones, helping more than her share of younger investors take a step toward realizing their goals.

All the work so they can play: Investment advisor Dean Spagnoli helps Gen-Xers salt it away early.

Of course, the information superhighway is a big resource to young ‘uns, giving them instant up-to-date stock information at the click of a mouse. “Now you can go on the Web and virtually every portal, Yahoo or MSN, has a link to click on to give you info about the stock market,” marvels Cadinha & Co. Inc.’s Greg Robertson. Sometimes, however, that bounty of facts and figures can get a little confusing, giving one the same feeling John had walking out of her college economics class.

“Ironically it is this over-abundance of information, as well as the quality of advice, which is confusing investors and forcing them to lose focus,” says Dean Spagnoli, associate vice president at Morgan Stanley Dean Witter and a Gen Xer. “People who invest with a goal in mind and remain steady in their game plans are being rewarded.”

Spagnoli has about 150 clients who fall into the Gen X category, roughly 33 percent of his client total. Some of those clients are Internet refugees, people who have invested online, but have been burned.

The Securities Exchange Commission recently announced that 90 percent of online traders lose 90 percent of their money, says Spagnoli. “It’s kind of like going to Las Vegas,” he adds. Speaking of losing it all, concern over the longevity of the Social Security System has been a major motivating factor for younger investors. “People are having to depend more and more on their own investments as a resource for their retirement,” John says.

According to the EBRI’s survey, 69 percent of Gen Xers feel the need to plan for retirement as compared to 51 percent of Baby Boomers in 1974; 65 percent of those Gen Xers have already begun investing with retirement in mind. And these younger investors are ambitious, thinking of quitting work earlier than their predecessors. Maybe even before 40. “Let’s face it, Gen Xers do not want to retire at 65 or even 55. They want to be done at 40,” Spagnoli says. They have the knowledge that the sooner they begin, the more time they have for compounding growth.” As outrageous as it may sound, Spagnoli doesn’t see retiring at age 40 as an impossibility. “The fastest growing age group of millionaires is 30-to-33-year-olds,” he says.

Of course, he’s referring mostly to the Internet miners who struck it rich. But for those Gen Xers without dot-com dreams, there’s always the Roth IRA.

“If you can put away 6, 8 or 10 percent of your salary into a growth fund … by the time you’re 20 years down the road, you could have $600,000 to $800,000,” Spagnoli says. “Time is your best asset.”

It’s an asset that Xers are rich in.


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