How Are Millennials Investing?
It is probably no secret that the younger generation is being faced by some serious issues. Plagued by an assortment of market inconsistencies and atrocious financial odds, living through the financial crisis followed by the Great Recession, it seems millennials have been having it rough ever since they were in high school.
This sense of economic PTSD appears to have followed them throughout their arduous journey into an emerging workforce.
Many young people in Malaysia, as well as throughout Asia, lived through these times with an understandable sense of anxiety surrounding their experiences. Evidently, real-world circumstances have forged young minds with a very different perspective on financial wellbeing…
There are studies that highlight the reluctance of millennials with regards to taking conventional investment risks.
A Wells Fargo study revealed that more than half of millennials say they will "never" be comfortable investing in the stock market while another study by Bankrate found that a quarter of millennials view cash as the best long-term investment. A Merrill Edge study found 85% like to "play it safe"with their investments.
All this points to one consistent observation. Millennial shave become jaded by a climate of seemingly endless financial shocks and are reluctant to embrace the stock market. The question then is how do millennials intend to invest if not through this (and other) traditional mediums?
Impact Investing
With a younger generation of investors gradually taking the helm and becoming leaders of the economy, it seems clear that we are seeing a transitioning of social values. Specifically, impact investing may eventually dominate investors’ ways of thinking and a study released this year found that “more than half of Millennial investors (52%) seethe social responsibility of their investments as [ ...] important selection criteria, compared with less than 30% of WWII-era investors and 42% of Gen X investors.”
This surge in the appeal of impact investing coupled with a massive inter-generational wealth transfer and some good old,instant gratification all spell a general lead up to major growth for the impact investing arena over the next 30 years.
This younger generation still draws respect and inspiration from such iconic figures as Bill Gates and the storied Rockerfellers though they may doubt the old methods of clocking in the effort and time needed to make billions of dollars before endeavouring into philanthropy. With impact investing, they have the opportunity to pursue financial returns and at the same time make a positive social impact.
It’s a narrative that has made its way to Asia and going against the traditional thinking of Asian private investors who typically view investment and philanthropy as separate subjects, social change through innovation and business looks to have become the new anthem of an entire generation.
35% of Asia’s wealth is expected to be in the hands of millennials in the next five to seven years, with ESG or environmental, social and governance issues factoring into investing decisions.
Diverse Behaviour
Meanwhile, as one side of the millennial spectrum invests with their morals, the other side takes after its predecessors. According to a survey by Manulife Asset Management, millennial investors in Asia are more willing than their parents to borrow money for spending but in terms of investment, their behaviour is similar to the older generation in that they invest mainly in property and like to hold cash.
The survey was based on the attributes of eight different Asian markets - Hong Kong, China, Singapore, Indonesia, Philippines,Malaysia, Thailand and Taiwan - which drew 4,000 respondents including 1,400 millennials.
Their findings revealed that a major portion of investments undertaken by the 18 to 34-year-old age group was in property and cash, especially with regards to planning their retirement.
Crypto
A large portion of cryptocurrency investors can be found among younger age groups, specifically the male demographic and when it comes to purchasing cryptocurrencies, age and gender happen to be crucial factors, according to a survey conducted by cryptocurrency startup Circle.
The interest in investing in crypto among millennial men is higher than that of millennial women with 18% of the former planning on investing in crypto in the course of the next one year compared to 7% in the latter group.
Another study conducted in the United Kingdom showed that some among the millennial age group preferred bitcoin over real estate due to their view that bitcoin and other cryptos have more upside potential compared to property.
71% of millennials have invested less than US$1,000 in cryptocurrencies while 29% have put in amounts ranging between US$500 and US$1,000. 42% have staked amounts of less than US$500.
It may be safe to say that millennials’ investing habits vary and while it is interesting to observe how a new age of investors makes decisions based on the circumstances they’ve faced, it may also still be too early to see how they will fare in the long run.
