Global Trends in Millennials and Investing: A Fresh Perspective
Millennials play a significant role in changing every facet of the dynamics of the world in multiple ways. A recent 2022 study conducted by the Bank of America stated that approximately 75% of investors within the age range of 21-42 asserted that more than investment in traditional assets may be needed to receive lucrative returns. 80% of these enthusiastic investors strive to find alternative sources of investment, like real estate, digital assets, etc, to find more tangible returns.
A shift in the trend
Two major findings came from the Bank of America study. They found that the millennial generation was shifting towards more transformative digital assets like cryptocurrencies. The belief in tangible investment opportunities could be one of the primary reasons that lured nearly half (about 47%) of young investors to dive into that market.
Another area that is of great significance to millennials is the concept of sustainable investing. Reportedly, there has been a two-fold jump in sustainable investors since 2018. 73% of millennials are making sustainable investments. This study provides a global perspective and shifts in the overall mindset regarding millennial investing strategies.
Millennial Investment Trends Across The Globe
The investment culture across the world depends on several factors that could be based on external factors like the economic condition of the country, current trends, recent events, regulations, and many others. Internal factors also play a huge role in contributing to the overall mindset of each millennial who tried their hand at investing like – values, risk tolerance, opportunities, etc. Individual preferences regarding investing may differ from continent to continent. However, some general trends can be identified across each.
- North America
In North America, the trends of millennial investing are unique.
- There is an expressed interest and, therefore, an increase in passive investing options. With the assistance of low-cost index funds and EFTs, this generation has pioneered investment opportunities with a segue to garner greater exposure to a larger market.
The overall philosophy behind these investment opportunities is the belief that the financial market is set to grow in the long run. Additionally, the cost associated with actively managing funds can also be reduced with passive investments.
- Another area that the millennials of this region show their strong and active support via investments is the sustainable and socially responsible market. The Sustainable Investment Forum North America is renowned for an overall economy of 3 trillion USD in assets.
The millennial ‘woke’ culture, especially in the North American regions, has lured them towards investing in eco-friendly and socially responsible companies. The advent of cryptocurrency also brought on a significant number of investors from the millennial generation in these regions.
- Europe
A 2023 report by EY showed that millennial investors in Europe have a 1.5x larger appetite for riskier investment opportunities, even amid the highly volatile nature of the market, as compared to the previous generations. This is also seconded by the practice of moving money more frequently and actively. Since the culture for younger investors in Europe is to respond to the change and fluctuations in the external events in the market, this style of investing is common.
Another recent development in the European market, owing to the uncertainty of the economic outlook, is the increased need for financial assistance among millennials. About 38% of European millennials seek financial advice due to the situational factors in the region.
- Asia
Technology has greatly influenced how millennials in Asia invest. The overall collectivistic culture and upbringing make Asian millennials more likely to resort to personal financial advisors that use human connections like trust. Individualized wealth planning is a huge part of the style of investment in this region – this is supported by financial advisors who can tailor-make plans for each person depending on certain desired factors.
A trend that Asian millennials are known to follow is tech-centric investment. The enhanced interest in technology and other innovations like AI, renewable energy, etc., has created a larger pool of attraction, with millennials jumping on board such opportunities.
They have also expressed a great interest in emerging markets along with familiar local markets and real estate. Cryptocurrency and blockchains were also a big deal regarding millennial trends in the arena of investment. A vast majority of millennials created online wallets as they saw cryptocurrency to be a great opportunity for growing their money
- Africa – Africa is deemed as the ‘youngest’ continent in the world. Millennials in Africa have grown as a socio-economic group and are influencing the economic structure of the area.
A report suggests this generation saves up to 10% of their earnings per month and shows a keen interest in garnering more knowledge toward better investments. Since moral consciousness plays a huge role in the overall millennial culture, the investing standards show a high value-based system leading to social transformation.
Another study in 2022 revealed that African investors place their investments in the US stock market as well.
Each region around the world varies in its social, economic, political, and cultural factors – these factors can heavily influence millennial investment philosophies. The overall landscape of investing is dynamic and ever-changing. It is, therefore, important to consider multiple facets at the personal and the holistic country level before investing. Globalization of the markets and better tech forces has made it possible for millennials to expand their investment portfolios by capitalizing on opportunities present across the globe.
