What makes millennial investors tick?
The millennials’ approach to investing is different and clever – and, unsurprisingly, influenced by technology and by their social and political concerns.
Born between 1981 and 1996, millennials were the first generation to really grow up with internet and mobile phones, making them totally at ease using digital technology and social media. By 2019, it is estimated that they will make up 31.5 per cent of the global population, becoming the largest group in the world’s top four economies: the US, China, Japan, and Germany.
But they are not only the largest generation. The millennials are also expected to grow their wealth significantly in the years to come.
Deloitte estimates that by 2020 the aggregated net worth of global millennials will range from USD 19 to 24 trillion. While many of them are yet to realise their full earning potential, the coming years will see a massive shift: “First, millennials are about to enter prime earning years, resulting in a meaningful increase of assets. Second, being self-employed as an entrepreneur is a key role model that will accelerate the increase of assets. Furthermore, millennials will benefit from the wealth of their baby boomer parents,” according to Deloitte’s Millennials and Wealth Management study.
Digital natives through and through
Technology is very important in the life of a millennial. This is a no brainer. Millennials are constantly connected, and keen to explore new digital platforms and channels. They have access to the greatest amount of information ever available. As true digital natives, they know how to handle the cloud and ever-growing data. They are informed about what is happening in the world. And they use this knowledge to their advantage when investing.
In an interview with the Spanish newspaper La Vanguardia, Esteban Polidura from Julius Baer Latin America explained that the investment process starts with planning and collecting information – traits that suit the millennials to a tee. “Millennials are avid collectors of information, especially through digital media and social networks, and this makes them particularly aware of the problems that afflict the world, as well as the opportunities that can be generated from these issues. This generation has managed to automate this flow of information and interconnect it with all types of content. Additionally, millennials are also good savers and especially skillful at planning their finances,” said Polidura.
In fact, they are better prepared and more critical than their parents’ generation. And they stand for today’s social values of transparency, sustainability, participation, collaboration and social commitment.
Young entrepreneurs are hungry for more
Skilled at using digital media to his advantage, 27-year old Farhad is a young entrepreneur and avid businessman, who was born in Iran but is now based in London and Dubai. He tries to scout trends and act before the markets do. He believes that digital disruption is the next big thing, in particular Artificial Intelligence.
“AI is the future. Some say it is hyped up, but I think it is being underestimated. Machines will become our personal assistants, helping us to take daily decisions that we don’t want to make or don’t have the time to,” explained Farhad at a recent Global Young Partners Reunion, a Julius Baer’s platform for the young generation.
Celine is another Young Partner. The 32-year-old Chinese national made her first investment at 18 and considers herself as a seasoned investor. Her biggest success to date is an investment in a start-up business – a so-called unicorn – that took off magnificently. Celine is a firm believer that the best source of information is a hybrid model between using your network of family, friends and banking experts combined with robo advisors.
Celine and Farhad have already achieved a lot at their young age, however they both agree that resting on their laurels is not an option. They see their future as bright, with more investments and more success ahead of them.
Impact investing, the ’do good’ investments
The Wall Street Journal says that millennial investors want to make a social impact and are likely to invest in companies that “mesh with their social and political concerns — from clean energy to gender equality to water conservation.”
Barcelona-based Carlos fully agrees. At 26 years of age, he has already set up a successful fitness business and is constantly looking for further sustainable investment opportunities. He feels lucky to be able to follow his passion for providing healthy lifestyle solutions whilst making money at the same time. This is exactly what Carlos believes millennials are looking for: to be able to make money in a sustainable way. “I believe that my generation is more conscious about creating businesses or making investments that positively impact society or the environment, and match our social, political or environmental beliefs and concerns.”
It is this concept of pursuing both financial return and positive social impact combined with a need for fast, digital and automated solutions that are the defining traits of millennial investors. After all, why wait to make a positive impact on the world when you could do it now?
What matters to you?
Life, business, investments, aspirations - what matters to you matters to us. This article is part of our ’Your Wealth’ series, in which we have a close look at what lies close to your heart and how wealth planning may help you achieve your objectives.