Think of the word ‘Millennials’ and what comes to mind? Probably something along the lines of avocados, Netflix binges and high-functioning poverty. If you listen to the average media report, the Millennial generation are a hapless mess, stuck in grotty rented properties, eating Pot Noodles and begging their parents for cash injections when they need to buy anything bigger than a pint of beer.
Well, like all stereotypes, that’s far from the truth. We recently carried out some research into the saving and investing behaviour of UK adults, and the results were surprising. The apparently penniless 18-35 year-olds are actually investing far more per month than their parents and grandparents (21% invest between £500-£999 a month, compared to 13% of Gen X-ers), and the research shows that they’re doing it in a much more tech-savvy way.
They use social media to find out where their friends are investing, they use digital insight to help them make their investment decisions and they put their money into online platforms to get more control over what happens to their cash. They’re active, they’re online and they’re more affluent than we thought.
They’ve grown up with low interest and high inflation, so they understand naturally that long-term investments like ISAs won’t give any kind of meaningful return these days. Instead, they’re showing that if you want a decent return you have to diversify your portfolio to include shorter-term, higher-yield options like P2P finance and auto-investing apps.
Using digital investments helps you get optimum control over your cash and insight on the companies you’re investing in before you commit. But you don’t have to throw the baby out with the bathwater - a good balance of newer, more flexible options with traditional vehicles like stocks and shares means you can get security as well as worthwhile ROI. You just have to be wise about how much you put in the ‘risky’ pot.
A healthy dose of digital and short-term investments can make a world of difference to the average portfolio – and as long as the interest rate continues to graze along the bottom of the graph, you’re going to have to find alternative ways to grow your nest egg.
The message for Generation X and the Baby Boomers is that there’s a lot to learn from Millennials about how to invest in the post-crash world. If you came of age in the boom days of the late 80s, you need to look at how your kids are using their money.