It is no secret: in almost every part of daily life, Millennials act differently than the people of previous generations. We accept more progressive social movements and practically rely on both designer coffee and fast food. We’re comfortable crossing the globe in a flight that lasts only a matter of hours and we purchase groceries by making a few clicks on our phones. Every day, we carry mobile devices that allow us to be reached in seconds by sending and retrieving information from a cloud in space. Think about all of these things. Chances are we haven’t stopped even once to consider how incredible they really are. Why don’t they amaze us? As Millennials, we haven’t thought twice about them because this is the kind of technology that we were born into. Consequently, we were born into unapologetic materiality and instant gratification that affect every aspect of our lives – including our investment styles.
Furthermore, a recent survey from BlackRock shows that 45% of Millennials say they are more interested in opening an investment portfolio today than they were only five years ago. As the Millennial Investment Movement grows, it is clear that our wide-ranging efficiency and materiality will change investing as the world knows it. Here are some of the major investing differences that Millennials are bringing to the table:
1. Caution to Enter the Stock Market
Remember the stock market crash of 2008? We certainly do. As Millennials, many of us were just beginning to understand different types of investing. Then, boom: everything crashed. For our first real impression of the markets, we got to watch our parents’ investments go down the drain. As they say, first impressions make a big difference. It is no shock that many Millennials begin investing with other, often less volatile, options such as bonds instead of stocks. Just as it has taken the global economy a long time to mitigate the damage done in 2008, it has taken Millennials a long time to regain confidence in the stock market.
2. Portfolio Checking is a MUST
When Millennials do invest in stocks, they do so cautiously. A survey run by BlackRock shows that Millennials are inclined to check their investment portfolios more than Baby Boomers – significantly more. In fact, “56% of Millennials regularly monitor their investments, spending 7 hours each month, while only 46% of Baby Boomers spend as much as 2 hours each month on their investments.” This can be attributed to the facts that Millennials are now paying student loans, entering an unyielding job market, and watching Baby Boomers receive Social Security that we likely won’t have access to. So, the fear of losing our hard-earned money to student loans and the current job market has many Millennials turning to our investment portfolios in order to stay financially on track.
3. Smartphones Make All the Difference
Educated investing? There’s an app for that! From calling an Uber to loading our extensive music libraries, we live most of our lives staring at a small screen. Investing, as it turns out, is headed in the same direction. Apps to educate investors, display market news, and even clear trades are now more popular than ever. In a world where Millennials can control almost every aspect of their daily lives through their phones, it is certain that investing and financial education are soon to become completely mobile, as well.
4. Technology Wins Out
It’s no surprise that people of different demographics invest in different companies. According to MarketWatch, older generations are consistently investing in healthcare companies while “younger generations show a preference for technology and other innovation-oriented companies.” We’ve grown up in the age of Facebook, Twitter, Apple, and Google. We see these names – big technology companies that we trust – and often choose them first when making our long-term investments. People invest in what they know and for Millennials, that’s technology.
5. Speaking of Technology: Online Investing is What’s Next
CNBC recently conducted a survey which showed that only “16 percent of millennials work with a financial advisor, about half the rate that baby boomers do.” This may be due to the fact that many millennials with low account balances are unprofitable for regular financial advisors; however, the growth of online investing may be the real explanation. Online investment brokerages allow investors to manage their own portfolios quickly, easily, and with low costs – usually without even speaking with a real person. Paying for a financial advisor seems to be of little use to a young generation that knows how to find information about practically anything on the Internet. More than any generation before, the Millennial Generation is turning independently to the Internet for both advising and investing.
With these differences, Millennials – a generation molded by instant gratification and technology – are set to change the way investing works altogether.