Millennials are born in a time when technology is at its peak. The generations before paved the way. But millennials live in a time when people are more educated and risk-averse – qualities beneficial to those willing to invest.
Here are two ways Millennials invest, and what you can learn from them.
Millennials conduct extensive research before investing
This generation’s huge, often-overlooked advantage is growing up within the rapid growth of technology.
From young, millennials are fed all sorts of information. Growing up, they then instinctively learn how to search for information effectively amid all the online “noise”.
Therefore, millennials are able to conduct online research on any topic, including how to invest, unlike before when only wealthy investors had access to investment advice via their money managers.
Today, we can learn about different investment vehicles and use our money to invest in these effectively. Additionally, we are also exposed to the best and worst practices in the industry. Through social media and websites, we can gather customer reviews and assess user experience.
Today, it is less time-consuming to find out which investment options suit us best. In return, our investment style is catered and specific to our personalities.
For example, most millennials tend to favour investments that promote social and environmental causes.
How you can learn: Do your research but beware of fake reviews or over-the-top praises for any one investment vehicle. Remember that a good product will never rely solely on such reviews to get customers.
Read feedback as well, especially on social media and online forums. Compare rates, as brand loyalty does not pay in the financial world. Update yourself about common (and uncommon) investment scams.
Millennials demand more transparency and digital security
Many financial services have moved online. Therefore, there is more public demand for transparency and digital security.
Many millennials look up to Edward Snowden. Snowden gained popularity when he publicly exposed things a government was deliberately hiding. Although the news spread mostly in the US, it has been widely broadcasted into the investment world.
As a result, millennials around the world are a lot more conscious of information and how it is kept digitally. Millennials demand transparency and enhanced digital security. As a result, financial institutions react quickly, or risk losing the business of millennials.
Today, we expect to be informed of all rates upfront with no “hidden rates”, a thing that was common in the past.
Financial advisors also advertise their management fees, making it easy to make comparisons (ask Gen-Xers – this was almost unheard of in the past).
As for digital security – financial institutions that do not invest in this sector can pretty much kiss their customers goodbye. Millennials are knowledgeable enough to know that an insecure savings account is like leaving cash in an unlocked house – we have heard too many cases of hacked accounts to take this lightly.
In conclusion, millennials are more attracted to financial products and services that provide enhanced digital security.
How You Can Learn: Do not trust companies with minimum to zero transparency. Always clarify what your money will be used and charged for before you hand it over.
Also, companies that do not invest in digital security are bad choices, full stop. Thankfully, this is more of a rarity nowadays – but one shouldn’t be lax and take it for granted.
The two ways millennials invest can explain the investment trends we are currently experiencing.
For one, a study confirmed that ETFs (Exchange-Traded Funds) had already surpassed mutual funds as the most popular investment vehicle.
Price transparency enables us to know that ETFs typically have lower management fees, which attracts millennials (and the rest of the population, to be honest).
For another, familiarity and preference for online, and non-human channels have given rise to robo-advisors, who are able to guide an investor 24 hours a day, 365 days a year.
Although robo-advisors are in its infancy in Asia, we foresee the service being popular among millennials in the future.
These two are very new trends, and unlikely to be the last. Millennials in general know there is much more to see and create in the investment world.
This article first appeared in thenewsavvy.com
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