New Age Investments: What Helps Millennials Grow Financially?
Concerning finance, the millennial generation can become a financial superpower, as the largest of all the current generations. They have greater access to investment options and advice than those before them.
Thanks to the countless technological innovations that have taken place in their lifetime, starting from 1981-1996 until today – that has made the process of investing more accessible for all and facilitated the creation of entirely new asset classes such as cryptocurrency.
However, they’re also one of the most financially burdened generations, with many having a lower average household income than earlier generations, on top of having to pay off a massive amount of student debt.
As such, many millennials have put off investing as they prioritise their day-to-day living expenses – this is detrimental in the long run as investing is a vital tool to securing a prosperous financial future.
However, many millennials have joined the investment world and are using the conditions unique to their generation to grow their money.
Here are the five features of this generation’s investment habits that are helping millennials grow financially in 2022.
They are investing in the stock market.
The most popular asset class among millennials are stocks, with 66% of millennial investors buying into the stock market –particularly growth and dividend stocks.
Stocks are a fantastic way for millennials to grow their money because of their youth compared to the older generations. Millennials can benefit from the incredible effects of earning compound interest long-term.
In other words, on top of the interest earned on stock investments over time, you also earn interest on that interest. Over time, this grows your money exponentially, thanks to the compounding effect.
They are investing in new assets.
Over the last decade, many new investment types have arisen, including cryptocurrencies such as Bitcoin.
Furthermore, over the last year, NFTs – Non-fungible tokens – have captured the attention of investors, thanks to the multitude of millions-of-dollar sales that have taken place. In particular, the collection of artworks sold by digital artist Beeple made $69 million in March 2021.
These new, digitally-powered investment forms are much more popular with the younger generations, who tend to be more comfortable with tech and all things digital. 39% of millennial investors are thought to have invested in cryptocurrency.
Though we don’t know if these decentralised investments will remain so lucrative in the future, this is one of the ways that millennials are currently growing their capital.
They are taking a tech-first approach.
According to the Financial Times, 62% of millennials from the UK, US, and Asia preferred to invest in tech companies.
Among millennials and Gen Z, some of the most popular stocks include Apple, Nio, Zoom, Nokia, Tesla and Plug Power (a revolutionary hydrogen fuel cell production company) that panders to two of the most significant investment considerations of the millennial generation: tech and the environment.
They are using investing platforms and apps.
A notable difference between millennials and the generations that came before them is how they invest.
Gone are the days when you had to ring up a brokerage in order to invest. Today, anyone can invest with a few clicks or taps on their computer or smartphone.
Such platforms include Wealthfront and eToro, which allow anyone to begin investing with only a small sum – a remedy to an old barrier to the world of investment when only those with a significant lump sump could get started investing.
Moreover, millennials use apps such as Acorns – a tool that synch’s up with your debit and credit cards, rounding up your purchases to the nearest dollar and saving the difference for investment purposes into stocks of the investor’s choice.
They are taking into account ESG factors.
More than any generation that came before them, millennials prioritise their ethical beliefs and values when making investment decisions.
A CNBC poll showed that around 1/3 of millennials only made investments into organisations that took Environmental, Social and Governance into account – factors that refer to companies’ commitment to ethical practices in these areas – which was significantly more than any other generation.
Moreover, 86% of millennials surveyed by the Institute for Sustainable Investing were interested in investing sustainably, and 88% were specifically interested in investing in environmental/climate solutions.
There is more than just a moral stance. As we head into the future, and society grows ever more concerned about the environment, human rights, equality and ethical practices, companies that take these issues thoughtfully are positioned to be more successful going into the future.
