Seven in ten millennials are now investors – here’s why and how they do it
By older generations, millennials are thought to be entitled, self-centred, spoiled, lazy or even overly sensitive. Yet, these are only myths that fail to acknowledge that this generation, as a whole, includes many bright and ambitious people that have managed to gain a significant amount of purchasing power. Millennials have become today’s investors. So just how did this generation manage to get so good at investing their money and building million-dollar fortunes?
Despite millennials’ reputation for being lazy, most actually work hard and strongly believe that their input needs to be meaningful and bring huge returns. As for the self-absorbed accusation, it couldn’t be any more wrong. Studies actually suggest that Millennials tend to invest in organisations and causes that prioritise the greater good more than any other older generation.
Now, millennials, just like their parents and grandparents, are a product of their times. Although their needs may not be entirely different from their older peers, their priorities are inevitably much different. Millennials not only prioritise things in their life conversely to that of their parents and grandparents, but they also shop, interact, travel and invest differently.
Millennials start investing earlier than their parents
Only a few decades ago, it was uncommon to see someone younger than 40 join the investment territory. Why? Because at that time, investments were simply inaccessible for newcomers. Today, however, the high entry barriers to the field have been lifted, making the investment landscape a lot more beginner-friendly.
But the investment landscape didn’t just change overnight. Millennial investors are those who have changed it through their commitment to building wealth by their 30s. Compared to previous generations, millennials are wealth-focused, and it shows as many of them end up entering the investment territory. To be more precise, seven out of ten millennials do.
A recent study has found out that 85% of millennials don’t believe that they are too young to get into investments. In fact, the average age of millennials who are investors is 28. But why do millennials start investing earlier than their older peers? The answer to this question lies in the fact that millennials have a few important advantages that their parents and grandparents didn’t have. For example, millennials have access to better education, including financial literacy, and access to plenty of technological tools that simplify investments or even allow anyone from anywhere to invest.
Therefore, while previous generations have seen financial success in keeping a job for the long term, climbing the corporate ladder and saving a significant amount of money for retirement and a home of their own, millennials have a completely different perspective based on their time. They want to be rich, but guess what? Millennials don’t see financial success as simply being rich. A study has found that 60% of American millennials view financial success as not having debt. That’s not really surprising considering that millennials are currently the generation that is most affected by debt.
Millennials choose social-impact investing
Just because they want to build wealth and be rich doesn’t mean that millennials would give up their morals to achieve this. In fact, their preference for social-impact investing is one significant thing that varies them from previous generations. Millennials are more pressed by environmental issues, which is also why they are more willing to put their investments to work for the public good through sustainable businesses and charitable projects.
Even when they are not investing in stocks, foreign currency exchange or real estate, millennials still put their money to work for the public good. More specifically, as customers, millennials choose to buy from green companies that have eco-friendly practices. Even as employees, millennials protect the environment by refusing to work for companies with unethical practices.
Millennials choose alternative investment methods
Besides starting to invest earlier and putting public good and social responsibility at the top of their priorities, there’s one more thing that differentiates millennials from their older peers: they invest in different things. While their parents and grandparents invested in stocks, bonds, cash and real estate, millennials invest in cryptocurrencies, Forex, hedge funds, commodities and private equity.
They are the generation that was just starting to discover the world when technology entered the scene. So, compared to their older peers, millennials are much more familiar with technological advancements and investment opportunities offered by the Internet. Their understanding of technology and entrepreneurial spirit has made millennial investors find alternative methods to make more money.
Take Forex trading, for example. 43% of Forex traders are individuals aged 25-34 years, meaning they are part of the millennial generation. That’s almost half of all online Forex traders. Financial literacy, real-time access to information and endless Forex trading technologies that facilitate investing in foreign currencies are some of the advantages their parents didn’t have back in their 30s. ECN brokers that have been long enough on the market have likely noticed how millennial investors have increasingly joined these new, alternative investment opportunities.
Millennials are more cautious with their money
Surprising as it may be, these individuals who want to be wealthy aren’t actually throwing their cash around. Millennials are aware of the fact that they live in a fast-paced time and they face more instability than older generations did. Besides these uncertain times they live in, most millennials also probably recall memories from the financial crisis in 2008 and 2009 when their older peers lost their jobs or went bankrupt. For these reasons, millennials tend to put the risk in perspective when it comes to how they invest more than their parents or grandparents did.
The editorial unit