How to Invest Like a Millennial

See all Posts
February 17, 2020


There are so many bad stereotypes surrounding Millennials. They get blamed for everything from global warming to the death of the high-street. This generation of people, generally born between the early 1980s to the late 1990s represent one of the largest groups that have a  significant impact on the economy.

They are unique in their saving and investing habits. Nearly half of all millennials are already concerned about being able to retire when they choose, and two-thirds are concerned about outliving their retirement savings.

Millennials are wary of their money and their investments, having seen their parents go through the great recession they’re more cautious with their wealth. Instead preferring to save their money rather than investing and view savings accounts as a safer bet than the stock market.

In this article we’re going to look at the saving, investing and spending habits of millennials and how we can be more like them when managing our wealth.

  • Socially responsible investing
  • Simple investments
  • Long-term investing

Socially Responsible Investing

Socially responsible investing (SRI), also known as social investment or impact investment, is an investment that is considered socially responsible due to the nature of the business the company conducts. Socially responsible investments can be made into individual companies with good social value, or through a socially conscious mutual fund or an exchange-traded fund (ETF).

This is a rapidly growing industry of investors who are leading the way in global change concerning investments and pensions. Typically your pension would be held with thousands of others and invested into a monopoly of portfolios, that might be digging for oil in the middle east or manufacturing weapons for war.

The primary role for an SRI is to invest in social and environmental projects and still create a financial return for you, the customer.

There has been rising interest in so-called “socially responsible” investing, this is driven by an increasing number of millennials who are starting to invest. 86% of millennial investors are very or somewhat interested in sustainable investing, compared to 75% for the entire population.

There are two main goals of socially responsible investing; both social impact and financial gain.

They don't necessarily have to go hand in hand. Just because an investment states itself as socially responsible doesn't mean that it will provide investors with a good return. The promise of a good return is far from an assurance that the nature of the company involved is socially conscious.

You must still assess the financial outlook of the investment while trying to gauge its social value.

Simple investment

When millennials do invest, they like to avoid complications. Millennials are a significant driver of the push toward index mutual funds, which have low expense ratios and are merely designed to track the movements of individual indices or the overall stock market.

Many millennials may recall the major stock market decline in 2001 and the financial crisis in 2008 and 2009. They may have memories of loved ones losing jobs and losing a lot of money in the markets. These memories may impact their investing approach and cause them to act cautiously.

Less is more.

Investing is not a get-rich-quick scheme, but rather a way to consistently grow the wealth you already have. The good news is that even though investing is a way to grow your wealth, you don’t have to have a lot of money to get started.

Having a more cautious approach to investing and managing wealth, makes millennials more tactful when handling investments. Finding a small but impactful investment is of more value to millennials than large irresponsible investments that leave them with a level of risk.

With housing prices skyrocketing and climbing aboard the property ladder getting increasingly more difficult, many millennials are using their hard earned money to invest in property.

With Fintech apps like Plum hitting the market it’s increasingly easier to have money put away monthly or even weekly, into savings or into an investment of your choice without having to lift a finger. Through this you have the range to invest in multiple investments at whatever risk you’re happy with.

By investing in a range of assets you reduce the risk of one investment's performance severely hurting the return of your overall investment. This is called diversification, think of it as financial jargon for "don't put all your eggs in one basket.

Long-term investing

When it comes to investing their money, millennials aren’t turning to the stock market.

A new survey from Bankrate asked more than 1,000 millennials what they consider the best way to invest money they won’t need for 10 or more years. Real estate was the most popular response, chosen by 31% of respondents.

Not only do millennials have the highest preference for real estate of any generation, they’re the least likely to put their money into stocks.

Given their love for anything tech-related, it should come as little surprise that millennials are taking advantage of a variety of high-tech and social media tools that allow them to plow their wealth into the investment vehicles of their choice. They are now leveraging social networking platforms, websites, and mobile apps to do everything from following stock-picking tips to finding financial planners.

When faced with the idea of long-term investments, many millennials seek professional advice. 43% of the affluent millennials surveyed said they use a financial advisor. Notably, 27% of those who reported using a financial advisor said their investments perform extremely well.

Using a financial advisor gives you peace of mind when investing your hard-earned money into your long-term future.

At Ai Investment Group we work with you to manage your wealth and investment opportunities to maximise your assets. We always keep in mind your long-term objectives, this allows us to steer your portfolio in a direction that serves both your financial ambition and your specific lifestyle choice.