New research from investment management firm BlackRock suggests that Millennials are fearful of the stock market and sitting on too much cash in their accounts. It got me thinking – do Millennials fear the stock market? Or are there other factors at work?

Millennials came of age during the global financial crisis and Bernie Madoff Ponzi scheme era. They watched their parents lose half their retirement savings in just a few short months between 2008 and 2009.

Related: A conversation about Gen Y money

But sitting on cash may not signal a fear of the stock market. On the contrary; it might be a prudent move, depending on their financial goals.

I started investing when I was 19 years old. The TFSA didn’t exist back then and so I decided to put small amounts into my RRSP every paycheque, thinking I was wisely getting ahead.

It turned out that wasn’t such a smart move, after all. Why? Because I was saving for a goal that was at least four decades away. Meanwhile I didn’t bother to prepare a plan for the short-to-medium term future. You know, like how to pay off my student loans and credit card debt faster, where to find money to save for a wedding, house down payment, and maybe a new car.

Investing for retirement should have been the least of my concerns back then, and sure enough, I ended up raiding my RRSP to pay off my debts and get my financial life back in order.

Related: The worst financial advice ever given to Millennials

If I could do it all over again today (and tax free savings accounts existed) I would stash my cash inside a TFSA – likely in a high interest savings account – and use the money to fund my short-term goals. Does that mean I fear the stock market? Hell no! But where you place your cash should be determined by when you need the money. If that time frame is anywhere between 0-5 years, the stock market is not the place to park your savings.

So perhaps Millennials are holding cash and avoiding the stock market for other reasons. Whether they’re burdened with student loan debt, or saving up to buy a home in an expensive city like Vancouver or Toronto, or just trying to get on the right financial footing, you could argue that it makes better sense to hold cash for the short-term rather than stocks and mutual funds for the long term.

Don’t get me wrong; investing for retirement is important, and the earlier you get started, the more compound interest can work to your advantage. But options like a TFSA makes it easier to save for short-term goals so that young savers don’t have to get ahead of themselves like I did, only to dip into their retirement funds later when they need the money.

Related: An easy, yet sophisticated way to invest

The other factor could be that Millennials are shunning the traditional banking and investment model that has been riddled with high fees, conflicts of interest, and stodgy face-to-face, pen-to-paper practices that should be obsolete by now.

Millennials have grown up banking online and should embrace the robo-advisor model where they can open and account on their smart-phone in five minutes and start investing. That, combined with an independent fee-only financial planner should get Millennials excited about investing and building a healthy financial future…eventually.

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