Whether you like it or not, you cannot deny millennial investing trends.
Especially the severe slump in the markets post 2008 crisis literally remolded the millennial investing format.
Investing parameters changed and a new normal replaced the old order.
It is common knowledge that all investments carry a certain amount of risk.
But suddenly optimizing the value of money is also equally important.
A sudden new element of excitement and apprehension has taken center-stage.
The constant effort is to create a model that limits capital erosion.
Somehow the images of the overnight bloodbath on the street will not leave the Millennial generation in a huff.
Today the Millennial workforce make up close to 35% of the workforce.
This is what makes it important to analyze and take into consideration the millennial investing trends.
The concept is veering closer to the fact that you have to make your money work for you.
The idea is to grow your financial portfolio in a way that your retirement kitty is not wiped out overnight.
That you must remember is one of the most important millennial investing trends.
After all, this is the generation that had to bear the brunt of one of the most brutal market falls in the recent times.
They had barely hit adulthood and an active employment opportunity when disaster struck.
Needless to mention their priorities are very different from the baby boomers before them.
That is why millennial investing trends is one of the most striking realities of modern times.
Good ties, bad times, small investment or long-term ones, you cannot avoid the definitive investing trends.
It is distinctly different, even bold in many ways and spells out the trend in broad terms.
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Who Are the Millennial Investors?
But before we delve any further into the millennial investing trends, let us understand who these millennial investors are?
The term refers to the generation born between 1982 and 2004.
After the Generation X, they are the biggest in terms of numbers and have long edged past the baby boomers.
They got the name Millennial primarily because they are born close to the new millennium and most touched adulthood then.
They are in fact, the first generation digital natives.
Technology, unlike the previous generations, played a very important role in their lives.
Mobile phones, tablets, phablets, this generation is a decidedly device savvy one.
In fact, the recent growth in the technology sector is also courtesy of them.
In fact, this is also the most ethnically diverse and radical generation.
As a result, the millennial investing trends are distinctly unique and different.
Stagnant wages, sudden and deep recession, they have practically seen it all.
In fact, the most 20 something have also known what it means to be out of work quite early in their career.
Stagnant job markets, loss of mobility here are realities that they had to face right at the beginning of their careers.
Therefore given their experiences, their financial perceptions and aspirations can’t be equaled to the baby boomers for sure.
People are able to save lesser because earnings and subsequent pay hikes are lower.
Now add the debt burden to that as well.
All of these together were the perfect recipe for a rather difficult dilemma in economic terms.
You may call them spoilt, saddled with convenience or born with a sense of entitlement.
But at the same time, you cannot deny they will have to work longer and still not save as much as their predecessors.
Financial Challenges of Millennial Investors
Therefore, when we are discussing the financial realities facing this generation, it is imperative that their challenges are unique.
In terms of the average income, they lag behind the baby boomers severely.
So they start off with a significant wealth gap in their day to day expenses compared to the previous generation.
So their cardinal priority is making sure that they have enough to meet their daily expenses.
That does not even mean that they can directly get on to the job market.
The sluggish labor market also meant that they have postponed their job plans in favor of higher education.
Part-time jobs no doubt have been in the limelight.
The priority is more about dealing with the present than the future.
As a result, their challenges and goals are distinctly about achieving financial independence.
Creating that kind of wealth needs serious long-term strategic planning and focused thinking.
1. How to Achieve Financial Independence
Most millennial live from paycheck to paycheck.
So it has become important for them to generate that additional income.
Frugal living cannot guarantee that for them.
After all, a few coffees less at Starbucks or a couple of burgers less in McDonalds cannot help them fashion a comfortable retirement.
The effort is constantly about enhancing avenues of employment.
2. Dealing with Debt
Cash is king for this generation.
They also have to prioritize their purchases, so debt is also priority based.
The idea is to pay off debt as quickly as possible.
Along with that, a good credit card score is crucial.
3. Prioritizing Purchases
But this is not a generation that spends frivolously.
Lenders are implementing stricter rules for loans.
As a result, the millennial has to learn to balance cash with loans.
They are also formulating a strategy to line-up purchases.
When you are discussing millennial investing trends, the future is a paramount concern.
This is because one of the biggest areas of worry is whether the millennial generation will be able to retire.
You may consider that for this age group which has seen it all from recession to economic hara-kiri, retirement planning is natural.
But close to 30% of the millennial are hoping for a big inheritance or lottery win to fund their retirement.
Therefore, it will not be wrong to assume that a relatively good percentage of them are going to struggle through their retirement days.
Moreover, studies indicate a whopping 70% of them live with the thinking that they will be able to sustain with an annual allowance of less than $40,000.
Let alone the lower purchasing power of $40,000 in about 30 years from now.
Future planning, therefore, you can understand, does not come to them naturally.
They have seen massive real estate busts and boom and have understood that pension plans may not be all that reliable.
But despite all of these, they are lagging severely in the savings department.
In fact, the retirement plans too play a crucial role in this.
They are structured in a manner that makes saving rather difficult.
Most times, even if the employer matches 10% of an employee’s contribution, it is considered huge.
To make it even worse, the social safety nets are also waning in terms of support cover.
Moreover, the pointed avoidance of any type of stock market exposure is another worry.
Remember if this generation wants to create lump sum savings, it has to be done in a hurry.
Key Millennial Investing Arena
A very few asset classes can meet the percentages in terms of returns when you compare with stock markets.
But a paltry 25% or even less have stock market exposure.
The aftermath of the 2008 crisis has left many scarred for life.
So the question now is if you follow millennial investing trends, where do they put their money?
You must remember that they are approaching investment in a completely different manner.
It is distinctly different from how their predecessors did.
For millennial who can invest, the percentages are much higher than baby boomers, sometimes close to double.
They are leveraging social networking and information vehicles a lot more than the earlier generations.
Quite needless to mention, they are depending a lot more on technology.
They are turning to apps for practically everything from stick tips to accessing financial planners.
When the Millennial actually gets on to investing in stocks, they don’t wait for tips gathered at a golf course.
Rather they just click on an app to review a specific trade.
Brand loyalty too plays a crucial role in their investment decision.
Moreover, their social and environmental responsibilities also play a cardinal role.
Therefore, you can imagine, sheer monetary gain does not cut the ice for this genre of investors.
So they are keen on using a variety of online apps to power their savings ahead.
They want to be in control.
They do not want to simply call the broker place the trade and be done with it.
Furthermore, they want to stay updated about their portfolio and use technology to the hilt.
The millennial investor is also making informed choices increasingly using technology continuously.
Therefore, it is not unnatural that close to $1 billion has been used to fund technology in the financial space.
Increasing Use of Investing Tools
The increased use of investing tools is the other major millennial investing trend.
This is the generation that has learned to rely more on technology than actual human intervention.
You may wonder if there is any connection between this and the increased demand for mobile-enabled, computer-friendly employees.
Suddenly degrees have to share their space of glory with these technological interventions.
There is a complete platter of devices wooing the millennial investor with its charm.
Therefore, millennial investing is a lot more tech-enabled than it was ever before.
You are a whole gamut of apps creating a conducive and safe investment environment for you.
From robo advisors to mobile-enabled investors, there is no dearth of opportunities now.
From automated trade to portfolio rebalancing as per existing algorithms, nothing is impossible.
Even investment advice is given via apps absolutely free.
The idea is to make understanding of the markets as clear as possible with these apps.
You can also plan to use personal automated planners and get customized services.
These provide you assistance in creating a financial plan customized for your needs.
You can also manage all your savings under one web-based platform.
Needless to mention the thrust here is capital preservation at every point.
From free trading to low service charges, the realm of possibilities is huge.
You can use technology to synchronize your investments and maximize profit.
Moreover, the purchasing power of the millennial investor may reduce significantly.
The effort is to constantly help them optimize savings and even create convenient and small nuggets of investment.
Affordability is the buzzword in most modern investing trends.
Therefore you have to understand that millennial investing trend is a lot about creating value for money.
Need to Invest with Care
The core idea is to work out a promising plan that offers maximum returns.
Therefore the millennial investing is often about how much care you take of your investment.
Having burnt quite early on, they do not rely on second-hand information entirely.
The idea is to stay in touch and invest your care.
There is a greater value for money and appreciation for cash.
The idea is to make sure that every penny that you deal with offers you the maximum possible value by the end of it.
Time is not in favor of them.
Most of the millennial investing are about saving a lot of money in a hurry.
So they will not trade any petty stock blindly.
They carefully assess the return ratio in a meaningful manner.
So instead of a high paying small cap trading, they will find more value in an interest paying savings account.
After all, they have seen portfolios wash out in a matter of minutes.
They will put their money only when they are sure of the risk and returns.
Often, capital preservation is as big a theme as higher returns is.
Most investing is done on the basis of this cardinal rule.
The effort is in identifying the right channels to realize these ends and create considerable savings.
The whole effort is in making sure the money is in safe hands.
They do not take chances.
Need for Alternatives in Your Investment
If you are analyzing the millennial investing trend, this one is as clear as the use of technology.
In fact, you can also say that the extensive use of technology has also facilitated this move.
Yes, I am talking about diversification, expanding investment horizon and recognizing the need for alternatives.
In many ways, it is also about going back to traditional wisdom and remembering not to put all your eggs in one basket.
Millennial investing is not just smart and savvy, but it is also wise and diversified.
Millennial investing is in favor of alternative investing at every stage.
As a result, you will see that they are also investing extensively in traditional safe havens.
Almost 11% of their assets are in gold.
The thinking is that stocks may offer huge returns, but they also need options with safe returns.
They do not want to peg all their earnings in one avenue and then be left with nothing.
There is a much greater and more thorough study of a variety of investment channels.
The core idea is to stay prepared for the worst but invest in the best.
But they are not being irrational either in the name of diversification.
While they are increasing exposure to precious metals and forex, Bitcoin has not seen that big interest.
It is technology based, promises higher returns, but it is also uncertain.
They are looking for more stable alternatives.
Millennial investing is primarily about creating meaningful investing models that help you spread out but not too far.
However you may invest, your alternatives have to be stable and reliable.
The percentage of returns and the consistency in performance are all extremely important.
Money is carefully allocated across a plethora of funds.
But at the same time, it is with precision.
Therefore, it will not be wrong to say that millennial investing trends are all about investing in yourself.
From expanding knowledge base to technological empowerment, millennial investing goes overboard in terms of personal safety.
Individuals are spending more time in knowledge gain.
The stress is more on accumulating as many skills as possible.
At the same time, there is stress on precision, pointed and pre-planned strategies.
They have also recognized the need to cut down expenses, be it health or unrealistic trades.
They have limited resources so they are keen on maximizing the potential.
A better quality of life with a greater scope of future spending is the basis of millennial investing trends.