Investing Trends And Statistics For Millennials
With the 2020s at the doorstep, a new generation of investors is emerging. Millennials, born between 1981 and 1996, are the most educated, tech-savvy, and socially mobile generation to enter the market. As they come of age, investing trends and statistics are starting to shape the landscape of the industry. Millennials are leading the charge in terms of investing, and are expected to hold the majority of wealth in the decades to come.
For investors of any age, understanding the current investing trends and the statistics associated with them is essential to success. By familiarizing themselves with Millennial investing trends and exploring the related statistics, investors can make smart decisions that will boost their portfolio. Let’s explore the Millennial investor trends and facts.
Socially Responsible Investing
Socially responsible investing is one of the most prominent trends for Millennials, as sustainability is becoming increasingly important and integrated into financial plans. According to the forum for Sustainable Investing, 70% of Millennials believe it is important to invest in companies with a positive environmental and social impact. Socially responsible investing is now considered mainstream, as roughly 13 trillion in assets is managed with this strategy, reflecting a 25% increase from the previous year.
Due to the popularity of sustainable investing, a wide variety of strategies are available. These may include investing in impact funds, companies that promote sustainable businesses, impact bonds, green bonds, and ESGS. Investing in these types of assets often comes with more risk, so it’s important to do research and understand the investment before committing capital.
Robo-Advisors
Robo-advisors are a newer technology that many Millennials are turning to. Essentially, these are automated algorithms that manage an investor’s portfolio, making trades and managing assets without the need for a human advisor.
According to the 2019 Investment Company Institute, one in five investors have used a robo-advisor, and Millennials account for 35% of these users. Robo-advisors are low-cost, convenient, and provide a great way for a novice investor to get their feet wet in the world of investing. They come with some drawbacks, however, and investors should understand the risks before signing up.
Cryptocurrency
Cryptocurrency is revolutionizing the financial of world of investing. Accounting for 6.2% of Millennials overall financial holdings, it is quickly becoming a buzzword. Bitcoin is by far the most popular cryptocurrency, and shares of the coin have risen significantly in the last few years.
When it comes to cryptocurrency, there’s a lot of potential and potential risks. Millennials should do their research and be aware of the inherent risks before investing. It’s also important to be aware of the IRS and potential taxes if these assets are held for more than a few years. As the industry is ever-changing, it’s important to stay up-to-date on the market, or better yet have a professional on ones side to help navigate the sometimes confusing crypto market.
Real Estate
Real estate is the oldest asset class, and is still popular among many investors. Available in residential, commercial, REITs, and land, real estate has plenty of options. And with a 56% recent spike in Millennials investing in real estate, it has been gaining traction.
Real estate can offer tax benefits, monthly income, appreciation, and control. On the flip side, leverage can amplify risks, rental agreements can be tricky, management can be difficult, and finding a good asset in an attractive area is challenging.
Impact of Stock Market Volatility
The stock market is a wild animal. It can increase and decrease rapidly. The change in long-term capital gains taxes, combined with fluctuations in the stock market due to geopolitical events and internal market dynamics, have made stock market volatility a major factor for investors.
Research shows that Millennials have been responding to market volatility by exiting the stock market. A bold move, but it may have been a smart one, as financial advisors suggest that investors hold for the long term, rather than trying to outrun the markets.
Millennials have served a dominant industry force in recent years, as many have entered into a variety of investment strategies. Understanding the broad trends and the associated statistics can help investors make the best decisions. As this generation marches into their prime investing years, it’s likely that these trends and stats will continue to shape the investing landscape.
For any investor, regardless of age, understanding investment fundamentals, product-specific information, and financial markets is essential to success. A team of experienced professionals is invaluable when building a portfolio, as they can provide expertise, analysis, and perspective. Despite technology and trends breaking ground, healthy financial advice and investment advice is still hugely beneficial.
Millennials are a powerful and influential investing force, and the trends and statistics associated with them are telling. With the popularity of socially responsible investing, the rise of robo-advisors, and the impact of cryptocurrency, the financial landscape is trending in a new direction. All investors should familiarize themselves with the industry trends and research the associated statistics; that way, they can make the best decisions for their portfolio. And although technological advancements have disrupted the traditional financial industry, it’s still beneficial to have a team of professionals on one’s side. After all, an informed investor can make smarter decisions.
