After the rapid decline in March of the US benchmark indices, such as the, and many Americans returned to broader markets, helped by an unprecedented stimulus, lower prices and positive investor sentiment. The result: a wide variety of stocks made spectacular comebacks.
Statistics from several US brokers show that investors in different age groups are buying and investing more and more shares.
Below, we take a closer look at Gen X investment alternatives along with two exchange-traded funds (ETFs) that could provide this group with long-term growth opportunities.
Planning For The Golden Years
Those born between 1965 and 1980 – who would be between 40 and 55 years of age in 2020 – are usually considered part from Gen X, the group that comes after Baby Boomers and precedes the millennials. In the US, approximately 60 million residents belong to Gen X.
Also referred to as the Sandwich Generation, as many Gen Xers pay for a wide range of expenses for their adult children and for elderly parents, making saving for retirement becomes a challenge.
While Americans of all ages wonder if their savings will support a comfortable lifestyle in their golden years, for Gen Xers trying to balance priorities, allocating money for retirement can easily
Despite the obstacles, Gen Xers and most others, despite the obstacles, can comfortably retire.
Assuming an investor is now 45 years old with $ 50,000 in savings and that person plans to retire at age 65. That person now decides to invest those $ 50,000 in various ETFs and deposit an additional $ 3,600 annually at the beginning of the year. If this person has 20 years to invest and receives an annual return of 7% compounded once a year at the end of 20 years, the total amount saved will be close to $ 351,400.
In practical terms Saving $ 3,600 per year means setting aside $ 300 per month or about $ 10 per day. And if the amount contributed increases to $ 4,800 per year, the total savings will increase to more than $ 404,000 in the same period.
Here are two exchange-traded funds, Gen X and other investors looking for long-term gains may consider research:
1. Vanguard Total Stock Market ETF
Current price: $ 164.44
52-week range: $ 109.49- $ 172.56
Dividend Yield: 1.76%
Expense ratio: 0.04% per year, or $ 4 on an $ 10,000 investment.
The Vanguard Total Stock Market ETF (NYSE 🙂 offers inexpensive access to a wide basket of stocks under one umbrella.
VTI tracks the performance of the . An exchange-traded fund usually tracks an index. Since one cannot invest directly in an index, an ETF allows market participants to acquire positions in companies in the index.
This ETF has 3,531 shares across all sectors in mega, large, small and micro capitalization in US stock markets. . Technology tops the list with a weighting of 26.4%, followed by Financials (16.3%), Consumer Services (14.2%) and Health Care (14.0%).
The fund's three main positions include Microsoft (NASDAQ :), Apple (NASDAQ :), and Amazon (NASDAQ 🙂 . The top ten stocks make up nearly a quarter of the fund.
Year to date, the Vanguard Total Stock Market ETF has fallen by 0.5%. However, this measure excludes the dividend yield of 1.76%. Research shows that investors who buy and reinvest the dividends to buy more shares are likely to see significant growth in their savings.
Amid a busy US earnings season, many stocks are seeing increased volatility. As broader indices recovered significantly from lows in March, gains can be made around the corner. As such, a drop to the level of $ 150 or below is likely and could provide investors with a better entry point for VTI.
2. Global X Millennials Thematic ETF
Current price: $ 29.38
52-week range: $ 16.61- $ 29.47
Dividend Yield: 0.14%
Expense Ratio: 0.50% per year, or $ 50 on an investment of $ 10,000.
The Global X Millennials Thematic ETF (NASDAQ 🙂 that debuted over four years ago follows the Indxx Millennials Thematic Index . Stock selection is based on data, technology and demographics of consumer spending related to millennials, or the generation born between 1981 and 2000.
In other words, MILN can enable Gen Xers to build a youth-focused portfolio that's linked to millennials' spending habits and also offers growth in the next decade. It currently has 82 holdings in various sectors, such as social media, food, clothing, health and fitness, travel, education, housing and financial services.
The fund's three major holdings are eBay (NASDAQ :), Spotify (NYSE :), and PayPal (NASDAQ 🙂 accounted for approximately 11% of the ETF.
YTD, MILN is up about 13.5%. In the case of short-term profit-taking, there may be a drop towards the $ 25 level or even lower. Long-term investors might consider buying the dips in this ETF with millennium-themed exposure.
Bottom Line
As always, investors, including Gen Xers, should consider these ETFs as starting points for more research. They may also benefit from talking to their financial advisers.
