Nowadays, the word ‘millennials’ (people born between 1981-1996) comes packaged with some pretty negative stigmas. Especially within the realms of finance, which aren’t necessarily deserving. Here’s why.
Millennials took an enormous psychological and financial blow during The Great Recession back in 08/09. Right when they were at their most vulnerable. Older Millenials were in the early stages of their careers, while younger Millenials were tasked with navigating the job market in a post-recessionary environment. Not exactly a warm welcome into the real world. A study by Investopedia states that “The Great Recession left more than 15% of millennials in their early 20s out of work”.
As a result of the GFC, most millennials walked away with a blatant distrust for the financial system. The lasting impacts of the GFC have meant Millenials tend to value experiences over more serious financial commitments like starting a business, having a family, or learning to invest.
But here’s the good news. The cautious relationship millennials have towards money can be advantageous. Millennials are more inclined to make prudent investment decisions based on their preconceived cautions related to investing. And in my books, that’s part of a winning formula.
1. Millennials have age on their side.
If there is one regret all investors have, it’s that they wish they’d started earlier. Fortunately for millennials, they have the advantage of investing early on in life, and taking full advantage of the magic compound interest has to offer. Getting into the habit of consistently setting a portion of your wage aside for investing as early as possible will lead you to financial success sooner than you think.
Keep in mind that there is a big difference between saving and investing. Saving is a means of wealth preservation while investing, done correctly can provide compounded net returns, causing your net worth to grow.
Albert Einstein once said, “Compound interest is the eighth wonder of the world” and I couldn’t agree more. Millennials have the opportunity to plant compounding seeds earlier in life with all the more time to see them flourish.
2. Millennials align their spending with their values.
In days gone by, previous generations saw investing as a means to ‘get rich quick’ without putting much thought into the value or operations of the business they were invested in. Just look at what happened in Dotcom Bubble of the late nineties. Millions of people poured money into any hot stock that ended in ‘.com’ with complete disregard for business fundamentals. Contrary to their predecessors, I believe the investing outlook looks quite different for Millenials.
Fast-forwarding to 2020, Millennials are accounting for socially responsible, ethical, and environmentally friendly business practices when weighing up their purchases. A study conducted by Deloitte in 2019 mentioned that Millenials will generally support companies that align with their values. This places significant pressure on big business to meet the millennial demand. This phenomenon also fulfills a key investing principle.
One of the beauties of investing is that it provides the opportunity to put your money where your mouth is. Investing allows you to support the companies that have meaning to you with your money. In a nutshell, this means Millennials look more likely to connect their investing with their personal values. Making for a much more fulfilling investing experience.
The Rise of Sustainable ETFs, like BetaShares Global Sustainability ETF ASX: ETHI is case in point. ETHI tracks around 100 leading global sustainable and ethical companies and is a real-world example of the influence millennials are having in the investing world.
3. Millennials can adapt to change better than their predecessors
The world is changing fast. Faster than it ever has. And as such we have little idea on how the world will look in 2050, let alone 2100. It’s unclear what people will do for a living, what the political landscape will be, what kids will be learning in schools, or if AI becomes so powerful humanity as we know it is on the verge of irrelevance. If there is one this we know for sure, it’s to expect rapid change.
Born and raised in the internet age, millennials have always been surrounded by technology, and with technology, fast change is a constant. Being so accustomed to speedy change, Millenials can adapt more easily to the latest tech, culture, and movements, placing them in the best position to make informed opinions on the current and future state of the world. All of this puts millennials in the box seat to potentially making lucrative investing decisions based on long term technological innovation.
If you’re keen on digging into the latest financial tech (fintech), you can find and compare online investment opportunities here.
Hopefully, all Millenials reading this feel pretty good about themselves right about now. And if there is one thing you can take from this, it’s this: Make sure you don’t waste an opportunity and play to your strengths.
Of course, this is not a ticket to invest in the first stock or ETF that aligns with your values. This is purely a reminder that we millennials have many useful tools in our investing arsenal that are well worth using!
P.S. I’d love to meet you on Twitter: here.
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Disclaimer: This website (the “The Money Pal”) is published and provided for informational and entertainment purposes only. The information in the Blog constitutes the Content Creator’s own opinions and it should not be regarded as financial advice.