Educating Investors

Millennial Investing Trend5 min read

Millennial Generation is a group of people born anywhere from the year 1980 till the year 2000. So why is it important to understand the investing trends of this generation? Millennial Generation forms a large part of the total population which is moving into its prime spending years, and therefore, it is essential to understand their financial psychology. Their perception and expectation from various experiences pave the way for the demand for such products. For financial firms as service providers, they need to understand the investing trends of this generation to maximize the profit potential and cater to their demand. E.g., Millennial Generation is known to opt for rented premises over an owned house because of the advantage of geographical mobility. This may dictate the demand for residential real estate in the years to come. Analyzing such trends is essential to forecast the future demand outlook of the economy for various sectors and products. 

Another important reason to focus on this generation is timing. The Millennials are born in the times of rapid change in the technology, business environment, and therefore, their priorities and set of expectations are very different from the previous generations.

Here are a few Millennial investing trends that will define the way of doing business in the future.

  1. Technology at their disposal

Millennial Generation has grown up in the age of digitization and has exploited the use of the internet to the best potential. Technology has allowed access to education and knowledge about investing at a young age to them, making the platform equal for everyone. Millennial Generation is a tech-savvy group that prefer to invest through their mobile phones directly. It has provided access to loads of information, and therefore, the millennials have become independent in their research, financial analysis followed by buying and selling of securities.

2. Risk-takers

The current age bracket for the millennial population falls under 40, making them a young growing community with abundant opportunities. The advancement of technology, access to resources and age on their side has allowed the people from this generation to go high-risk investments like equities. Millennials are risk-takers. With the penetration of the mutual fund industry in India, most of their equity investments are through SIPs in mutual funds. Mutual funds have a more significant benefit with limited capital too. The high risk would mean high return which will enable them to achieve their target goals. They also have an entrepreneurial mindset, and therefore, they are not afraid to experiment. They might accept failures provided if they come with learning. They experimentation include investing in mutual funds for long term goals and simultaneously trading in stocks for quick money. They have a diverse thought process for their action.  

3. Goal-based investment

Millennials are one generation which beliefs in financial planning, retirement planning with the help of long-term wealth creation. They are persuasive in determining their long term goals, quantifying them to an extent and creating a financial roadmap to achieve them. This is known as Goals-Based Investing. Goals like a world tour, watching the Indian Pakistan match in the World cup in London etc. comes at a cost, but they have the plans ready. 

4. Access, not ownership

As discussed, they don’t prefer ownership of residential house because of their dream to move around the country and the globe in different cultures and environment. Similarly, they have been reluctant to purchase capital intensive goods like cars, luxury goods etc. Instead, they get a broader sense of utility and satisfaction if they can use it whenever they want. Such a particular approach towards consumption patterns implies the need to use instead of the need to own an asset. A simple analogy can be drawn from the above facts – use of cabs which give a similar sense of comfort would be preferred over a chauffeur-driven owned car.

5. Informed investment decisions 

With the advent and access to technology, it has become easy to compare between products, services, companies etc. The fundamental business models have changed drastically in the benefit of the end consumer. In the earlier 2010s, we used to have companies selling their products and services online using digital marketing techniques as it was just the beginning of the application of technology. Today, we have companies in the business of comparing similar products and services as a primary business. The limited point that we are trying to share here is that technology has allowed more information to disseminate to the users faster and reliably. This enables the millennials to directly compare the products and make an informed decision to maximize the benefit. Millennials do not mind talking about the help of financial advisors when investing. But millennials are famously known as do-it-yourself generation, and they will conduct their analysis before investing. Technology has brought the world closer and provided access to interact with any professional from all the fields in no time, further helping the people to make more informed choices.

6. Better thinkers

Millionaire generation is known to be better thinkers. Smart thinking is also a result of better access to resources. The ability to postpone an expenditure for something else is something that has been notably seen in this generation, i.e. their ability to prioritize their needs and expenses. They respect the service quality before choosing it. They don’t mind paying a higher cost for the same product if the perceived value of services is more elevated. If the service quality is not up to the mark and is irreplaceable, then the potential of an alternative business idea is enormous. That’s where you could see new fintech businesses coming up in the discount broking space too and capturing a good share of the market. Samco has been instrumental in giving better service qualities to the customers at a lower cost. 

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