How Much Do Millennials Know About Stocks?

Millennials are one generation that's definitely not envied; I ought to know, I am one. We have high depression rates, incomes that have stagnated since the Recession, and also have pretty abysmal chances at retirement. We're called greedy, ignorant, and of course, lazy, by those not of our generation.

Admittedly, though, we have our problems. Studies have shown that the vast majority of Millennials do not want to invest in the stock market on their own. In fact, only about a quarter of all Millennials play the stock market.

This is a huge problem, primarily because stocks are the best way to get a return on investment in the long run. It's hard to figure out why this is. Could it be fear from the Recession? A lack of education? Studies suggest it might be both.

But, let's be real here. Not all Millennials could be that in the dark about investing, right? How much do Millennials know about stocks, anyway? I did some research, and what I found was pretty worrisome.

When Business Insider asked Millennials why they didn't invest in the stock market, 35 percent of their responders claimed that they didn't have enough money to invest.

In the past, this wouldn't necessarily indicate that this generation was clueless, however, times have changed. A lot of apps and platforms now allow for fee-free trading, with some even giving Millennials the opportunity to invest spare change—like Acorns.

Truthfully, there are a lot of apps for first time investors and online brokers that make stock buying affordable. There's really no excuse at this point.

So, right off the bat, around 53 percent of all Millennials are not educated on the ways they could invest in the stock market without spending a fortune. This bodes poorly for Millennials who could seriously use the extra cash investing returns could offer.

Around 21 percent of all Millennials openly admit that they don't know anything about the stock market.

The same study showed that not many Millennials know about stocks—and that around a fifth of all people in the generation are honest about being clueless. Many Millennials believe that figuring out the stock market is too complicated to be worth their time, and as a result, don't even try to invest anything.

Between the group that was unaware of how to invest in the stock market with little money and this particular group, you're looking at a total of 74 percent of all non-investing Millennials. That's a lot of people who aren't educated about stocks, retirement, or investing in the least bit.

Millennials also are not aware that saving money is actually a bad idea for the long term.

One thing that seriously stands out in my mind is that Millennials don't realize how bad saving money can be. Global inflation is a real thing, and with American currency, inflation increases at around 2 to 3 percent per year.

This means that the value of every dollar you own decreases by that amount annually. So, if you want to buy a basket of goods for $100 today, you'll spend $100. That same basket, in a year, will be $102. You'll need to spend more to get the same amount of goods.

If you save money in a bank account, you're looking at an annual interest rate of 1 percent—at most. This means that you're losing money by saving it in a bank.

And yet, most affluent Millennials are choosing to save their cash in banks rather than invest it. This suggests that Millennials know about stocks' risks, but not their reward. It also suggests that they remain unaware of how inflation can impact their ability to spend later on—and that's potentially disastrous.

Another study showed that 69 percent of all Millennials are not saving for retirement.

The study was featured on MSNBC, and showed that only 31 percent of all Millennials had any retirement investments whatsoever. Many experts warned that if Millennials don't start putting away cash soon, they may be unable to actually afford retirement at all.

It's not certain whether it's because of how little Millennials know about stocks, or if this doesn't count 401(k) plans issued by companies. Either way, it's worrisome to say the least.

The news isn't all that bad. Other studies about Millennial investments suggest that around half of all Millennials have retirement accounts—but that may just be a glorified savings account, for all we know.

Some studies have said that Millennials are taking full advantage of 401(k) plans—which would mean they are investing, but don't realize that this is actually a form of investing in the stock market. Either way, that's pretty bad, isn't it?

The weird thing is that the amount Millennials know about stocks doesn't match their financial prowess.

Millennials have proven themselves to be one of the most frugal generations in recent times. Bragging rights among many Millennial groups involves being able to save big on retail, rent, and more.

Realistically, when it comes to saving, they're gurus. However, the problem is that their savings and budgeting prowess isn't translating into their financial literacy—at all, actually.

The sad fact is that numbers prove that Millennials aren't fiscally literate.

A massive survey was sent out by National Endowment for Financial Education and George Washington University to figure out how much do Millennials know about stocks, investing, and other key financial topics. They issued out the survey and asked respondents from my generation standard questions that every person should know.

Basically, the survey was designed to measure financial literacy. Very few actually passed the test at all. This means that most Millennials don't know anything about stocks, bonds, or even what a 401(k) is.

How bad the results were would shock most people.

Of all the thousands of responders in the survey, only 24 percent of all Millennials know about stocks or can even accurately say that they are financially literate. Sixty-nine percent of Millennials, though, believe that they are great at financial literacy.

In reality, only 8 percent of Millennials were ranked as possessing a high level of financial literacy. This means that less than one out of every 10 Millennials will know how to effectively trade stocks.

These weren't younger members of the generation, either. The people quizzed ranged from 23 years old to 35 years old. In other words, some were already parents and had full adult lives.

To make matters even worse, most Millennials also do not know how to prepare for an emergency.

The survey took a look at Millennial financial health, too. Around 48 percent of all Millennials did not have $2,000 in the bank for emergency savings. Most would also have a very hard time making ends meet if their next paycheck would be skipped over.

Of the Millennials who had retirement accounts or 401(k)s, one out of every five has made a hardship withdrawal in the past 12 months. This suggests that they may be treating retirement accounts like savings accounts.

This would suggest that Millennials face extreme difficulties making ends meet—or that what Millennials know about stocks hasn't really helped them figure out how to put together a retirement plan or an emergency fund.

As far as the investments Millennials DO enjoy, it's not looking too promising either.

Millennials aren't totally shy about investing, but it's clear that Millennials aren't really educated about the returns on investments. In fact, it's even doubtful that they are interested.

Around 30 percent of Millennials have expressed sincere interest in real estate investment. However, this, too, has proven to be a bad move that shows how little Millennials know about stocks.

Stocks give a 7 percent return, on average, annually. This takes into account inflation and everything else that can occur during a typical economic era. Real estate, on the other hand, stays ahead of inflation, but only by 1 percent on averge.

Take into account maintenance and all the other potential costs, and you'll see that investing in real estate isn't what it's cracked up to be. This, too, can make Millennials wince in the future.

The most embarrassing red flag about what Millennials know about stocks, though, is the stocks they choose.

One common statistic cited in all these studies are the most common stocks picked by Millennials—Google, Apple, Facebook, Twitter, and similar choices. At first glance, these tech companies do offer a lot of return, but there are noticeable problems with each of them.

A lot of tech stocks that Millennials enjoy aren't blue chip stocks, but rather trendy and volatile investment options. This means that they are very likely to fail in the long term, and can easily wipe out Millennial portfolios.

This isn't the only issue, either. Most Millennial stock picks don't offer dividends, one of the most lucrative aspects of stock portfolios as a whole. So, Millennials don't even actually know how to research stocks, in many cases. They just pick what's popular.

Clearly, what Millennials know about stocks isn't enough to ensure a good future. That should scare you; it sure scares me.