Where the Investors of Tomorrow Are Looking

Weed. Burning bras. Peace. Free love. Rock ‘n’ Roll. I have a feeling the 60s may be repeating themselves…

Look at the young kids today. The comparisons are clear:

A good experience wins over physical ‘stuff’. Travel beats suburban ennui (translation: boredom).

It’s no longer about fancy cars or big houses. It’s about ideas. Buying to be a part of something is more important than the bling so to speak.

Just like the flower power generation of their parents, this generation is all about ‘being’ over ‘having’.

At least until they discover the joys of property investing, SUVs and river cruises!

Jokes aside, there’s little doubt in my mind that this is going to have a major effect on how people invest in the future.

There are now 2.3 billion Millennials and they represent nearly a third of the world’s buying population. By 2025, they’re predicted to make up 75% of the world’s workforce.

You can’t ignore them any longer.

They’re no longer your kids — they’re your competitors. And they’re going to be the biggest drivers of the economy.

So what on Earth are our Millennials investing in?

Social purpose reigns supreme…big brands begone

One thing’s clear.

It isn’t cool to be concerned with status anymore.

Brands can still become big, for sure. Take the uber-popular Apple for instance. But to stay there they are starting to note their social impact.

All this should hardly be a surprise.

The world is changing fast.

In November last year, more than 1,000 students around Australia walked out of school to protest the government’s inaction on climate change.

Millennials care about not only what businesses do, but also how they go about it.

Research shows three out of four Millennials are willing to pay for more products that are ethical and sustainable. And the market I’m sure will happily take their money.

This attitude is also influencing the investment world…

The invincibility of youth

Investing into ESG (environment, social, governance) assets can be a risky endeavour.

When you pour money into anything that doesn’t have a primary focus on financial returns, your heart has to be in it for more than the dividends.

But this is exactly what Millennials are doing.

In a recent survey by Deloitte, Millennial workers were asked what the primary purpose of businesses should be — 63% of them said ‘improving society’ over ‘generating profit’.

A 2017 report in the Australian Financial Review found that Millennials were the likeliest group to embrace ethical investing, and were even encouraging their parents to follow suit.

Risk isn’t really a negative factor in their minds. One survey found that Millennials as investors are more optimistic and willing to embrace risk than their baby boomer parents.

It was also found that 70% of Millennials would choose funds or companies in accordance to ESG factors while only 21% of baby boomers made the same claim.

But this doesn’t mean youths are going foolhardy on the stock exchange.

Of all the Aussies who have tried traditional share investing, only 14% of Generation Y (born 1980–1994) and 9% of Generation Z (born 1995 or later) have tried it.

Banks and credit and bears, oh my!

The fallout from the Banking Royal Commission has made many young people question the ethics of banks and large consumer corporations in general.

Research has found Millennials have a high level of distrust of banks. They don’t think banks have even been helpful in managing their finances.

So where are Millennials putting their hard-earned money if not into credit or home loans?

Millennials are looking to the collective future instead of their own.

It’s not ‘where will I be in 40 years?’ — it’s ‘where will we all be in 40 years?’

As well as ECG, technology stocks are big— particularly ones that disrupt the current paradigm. Think fintech, payment solution companies (like Afterpay), crypto wallets or new app start-ups.

According to Deloitte’s 2018 Millennial Survey, 80% of Millennials believe business success should be measured in terms of more than just financial performance. They think it should make a positive impact on society and the environment.

Corporate social responsibility isn’t just a buzz phrase anymore. It’s a necessity. So, you can bet your bottom dollar that Millennials won’t go near any snake oil salesmen with a 10-foot pole.

They’re more cynical about the world of business. More wary, perhaps, than the older generations were.

But the Millennials are a fickle bunch, and just like their investment decisions, any way you try to play their game could be high-risk.

But watch this space, I say…

Because the way they invest will change the way everyone invests.

Good investing,

Ryan Dinse


Ryan Dinse is a contributing editor at Money Morning New Zealand. He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur. With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle. Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.


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