Millennials, loosely defined as those born in the 1980s to mid-1990, make up about a quarter of the world’s population. Nearly nine in every 10 millennials live in emerging economies. South Africa has more than 14 million millennials, or 27 percent of its population.
Attitudes towards money and investing differ greatly from previous generations. Millennials are sceptical of the financial institutions and strategies that their parents used. They’re a product of the uneasy economic conditions they’ve lived through, and are the first generation of true digital natives.
1. Their financial goals are different. According to the 2019 Deloitte Global Millennial Survey, those who started working after the 2008 global economic crisis have endured long periods of slow economic growth. They have lower real incomes and fewer assets than previous generations, as well as higher levels of debt. Of the 16000 survey respondents, 31percent do not have full-time employment.
Millennials often live with their parents, and delay renting or buying their first property. Many prefer to spend their money on experiences and travel. As many are unemployed or participate in the gig economy, they may struggle to plan for their financial future. The World Economic Forum predicts that by 2050, when millennials in the world’s eighth largest pension markets start to retire, the retirement savings gap will be $427 trillion (R6350 trillion).
2. They are early technology adopters. Millennials, unlike any generation before them, have had almost every aspect of their lives moulded by technology. For millennials, mobile is the medium of choice. They want to track their investments in real time from their iPhones. Investing needs to be straightforward and transparent, and would rather take a photo of document than complete paperwork. This has given rise to low-cost and easy-to-use investing and saving platforms to millennials. Millennials grew up exchanging pocket money for CandyCrush credits and other intangible digital goods. While their parents considered this frivolous spending, they viewed it as a valid exchange. It’s not surprising that this generation also influences the increased adoption of technology in investing. Bloomberg reports that robo-advisers, or artificial intelligence-driven advisers, assets under management will grow from $50billion to $2trillion in the US alone by 2020.
3. They are interested in cryptocurrencies. More than any other generation, millennials are interested in cryptocurrencies. A study of 1000 affluent American millennials by global communications firm Edelman, show that 25 percent of respondents use or hold cryptocurrency, 31 percent are interested in digital currencies while 74 percent believe that block chain will make the global financial system more secure. Crypto appeals to millennials on both a practical and a philosophical level. With no middlemen, there are lower fees for using and transferring it and blockchain technology keeps a consistent and incorruptible record. This emerging asset class resonated with the generation that distrusts financial institutions and exploitative business practices.
4. Socially conscious. The 2019 Deloitte Global Millennial Survey indicates that millennials support companies that align with their values, and reduce or cut relationships when they disagree with a companies’ business practices or values. Younger investors are leading the way in ethical investing. They lean towards shares and funds that measure progress on issues such as diversity and eco-values. They want to make a difference and see their investment decisions as just one more way to do this.
Sean Sanders is the co-founder of Revix.