What we do know is about millennials is that not only do they expect the highest investment returns of any generation, but they’re changing the future of investment.
Even with the economic downturn caused by the coronavirus pandemic, millennials are apparently still the most optimistic of any age group about the investment returns they expect to receive in the coming years. So, what are millennials throwing their hard-earned cash to be able to reap such highly anticipated rewards from their investment portfolio?
An alternative view
Even the most traditional of investors will have noticed a shift in the myriad of investment opportunities available today for people to become shareholders in.
Millennials are taking advantage of these new, less traditional options, expressing interest in alternative investments which focus on social and environmental causes and, of course, technology.
Surveys have shown that a large portion of affluent millennials prefers to make investments with companies with an enviro ethos like smart-energy technologies, cleantech companies like Tesla and solar-driven companies.
For the greater good
Unlike our more seasoned generations of investors who invest purely to create their own wealth for the future, millennial investors tend to make investment decisions which also offer greater social outcomes.
Companies that support social issues such as local initiatives or start-ups, gender or ethnic diversity, creating communities and affordable housing have proven to be popular recipients of millennial investments.
It’s not enough for them to just build their own personal fund. They want to make a better tomorrow. That’s not to say they don’t want their own financial return. But social impact investment is about generating positive and meaningful change in communities alongside financial return. Investments can be made into companies, organisations or funds – not-for-profit or for-profit – and can also be used to finance social services and infrastructure for the future.
For millennials thinking about social impact investment as an option, talk to your financial advisor or visit this page on our website and answer a few questions which will help us understand your investment goals better, so we can help you.
Property of: Millennials
Our younger generation of investors have every reason to be cautious about how they invest their money, particularly in uncertain economic times.
But are they turning their heads away from property investing?
Some believe so. A 2020 publications from ING, Future Focus: Homeownership Report, revealed that most millennials just aren’t that interested in building a property portfolio, but rather setting their sights on owning just one home, for themselves to live in. The survey showed 46% of young Australians believe COVID-19 has made home ownership more affordable and achievable, with 32% indicating they wanted to buy a property within two years.
Perhaps younger generations feel like they’ve been slowly squeezed out of the traditional investment market in Australia, which is property. Millennials are renowned for their ability to save, but not quite enough for a house deposit or property investment these days, which is why a lot are turning to alternative opportunities to get a piece of a different shareholding pie.
Property is still a priority for millennials but building a property portfolio may not as tangible and even low risk for this cohort as much as it was for the baby boomer generation.
Millennials and managed funds
Managing money is important millennials and although the majority keep their money in a savings or current bank account, many are looking for different ways to invest.
The question is, will millennials seek out the services of a fund manager to oversee their investment portfolio or would they just rather invest in a low-fee index tracker like an Exchange-Traded Fund (EFT)? EFTs are managed funds that can be bought and sold on the stock market like any share and they’re apparently gaining popularity with millennials. Why? Because they don’t have the burden of stock picking and allow them to easily access overseas markets.
The digital future
Technology is undoubtedly important to millennials and where this generation is focusing its investment efforts is definitely looking quite different.
Robo-advice is the concept of using technology as part of financial planning services, allowing millennials to build a tailored portfolio, usually heavily slanted towards EFTs, by completing detailed online questionnaires to unearth their investment interests.
The Australian Stock Exchange (ASX) has reported that ‘the booming technology sector’ is in focus for the younger generation of new investors in 2020. Buying of tech stocks by clients under 40 nearly tripled in March from February according to the ASX, with Afterpay and Kogan amongst the highly sought-after stocks purchased during that month. This isn’t a surprising statistic, seeing as people usually gravitate towards what they’re familiar with or interact with on a daily basis.
A confident bunch
Regardless of what they’re investing in, Australia’s millennial investors are apparently ‘leading the world in terms of market confidence since the pandemic began’, with a recent global Calastone study revealing 81% of Australian investors between the age of 24 and 39 have invested or are considering investing since March 2020.
With such a high rate of young people rethinking their long-term savings approach and taking charge of their financial futures, it’s important to remember that the sharemarket can be a risky option, so it’s crucial to have a plan in place and ensure you have the right balance of asset classes to put your portfolio in the best position to achieve your goals and create wealth for the future.
Note: Do not ready take any of the stock references in this article as recommendations. Do your own research or talk to a licensed financial advisor before investing.