Three reasons why millennials are investing in the post-COVID world
The COVID-19 pandemic has shredded economies and torn up the plans of scores of established investors.
But it’s not all doom and gloom.
A generation long dismissed as interested only eating avocado toast is swiftly emerging as a force to be reckoned with for investing.
Across the world Millennials are investing, riding a wave of opportunity the COVID downturn has revealed.
So what’s changed?
How has a generation long dismissed as not being interested in financial prosperity suddenly changed tack?
We think there are three main reasons, and all of them point to Millennials emerging as the future of investing.
1. Millennial attitudes to investing have changed
When Millennials came of age at the turn of the 21st century, life was peachy. It was a time of rising economic growth and relative stability after the West had emerged triumphant from the Cold War.
Then the dot com bubble burst. 9/11 happened. And the 2008 financial crisis gutted the global economy.
Millennials worldwide were hit hard with job losses, uncertain employment and high levels of debt. For many years most Millennials were either not in the financial position to invest in the stock market or willing to take the risk.
The generation was defined by financial movements like FIRE (Financial Independence, Retire Early) and a culture that valued immediate experiences like travel over delayed gratification like saving for retirement.
Now all of that has changed.
Now they’ve seen a crisis or two and progressed in their careers, the COVID-19 downturn has been a wake up call for Millennials.
They have gained experience – and are willing to use it.
2. Millennials have a tech edge for investing
In 2007, an epoch making event happened – the Apple iPhone was launched.
This single piece of technology jammed the accelerator to the floor for the widespread embrace of social media, online news and the ever-rising growth of the internet as the world’s primary source of information.
Through handheld devices like the iPhone, Millennials took a stake in the world, and used it to learn as much as they could, particularly about investing.
This interest has fuelled a spike in websites, apps and services devoted to making financial news and analysis as simple and straightforward as possible – ideal for the digital age’s fast clicking culture.
Millennials are using their understanding of technology to dive deeply into a realm that has traditionally been full of jargon and complexity and figure it out for themselves.
They seek out information services that emphasise graphs and charts, straightforward language and ease of connection.
These digital investment platforms significantly lower the barrier for entry to Millennials, who can feel more comfortable using a digital service than older investors who could expect more formal interactions.
So instead of having a lunch meeting with a broker in a glass and steel office, Millennials simply log on to their investment apps or information services and make their financial decisions.
3. Investing has adapted to Millennials
In the digital age, the kinds of investments Millennials can access are vastly different to those previous generations were able to engage with.
This evolution of financial products is especially important when you consider how new investors first enter the market.
People tend to go with what they know, and Millennials know digital.
In the digital age we have seen the rise of digital instruments like cryptoassets that can appeal to the technological interests of Millennials more than Baby Boomers who can prefer traditional currencies.
We have also seen the rise of digitally driven investment techniques like crowdfunding and Initial Coin Offerings for cryptocurrencies and businesses.
What these digitally focused investment opportunities add up to is a range of products that can directly appeal to Millennials as first time investors.
Combined with online financial news that emphasises easy to understand visual information like graphs, charts, and jargon-free summaries of market activity, you have a perfect magnet for Millennials choosing to invest.
The investment opportunity for Millennials
The key to the investing success of Millennials will be knowledge.
Because nothing beats experience.
In the post-COVID world, Millennials are now emerging as a new class of investor getting their act together and creating long term wealth.
But let’s face it, most Millennial investors are new to the game and haven’t been around the block as much as their Gen X and Baby Boomer counterparts.
To build up their ability to identify opportunities, weather difficult times and develop their own strategies, Millennials will need to learn as much as they can about the world of finance.
With more and more digital services coming online to support them, Millennials are in a good position to invest in their future.