It’s quite clear to see that we live in a very different financial world in the United Kingdom post-2000 and in particular post-2008. Interest rates have been slashed from 6% to 0.25% meaning that cash is worth very little in a savings account, and borrowing is cheap as it ever has been. Average house prices have risen from £123,138 to £234,466 (£474,704 in London) making the most consistently performing investment unaffordable for a lot of first-time buyers. Stock markets have been exceptionally volatile but currently, sit at record highs. Investment platforms have become far more diversified, with accessibility to both publically listed and privately listed companies far more attainable and affordable. This has meant that the new generation of The Millennial (those reaching adulthood after the turn of the millennium) are living in a very different world when it comes to investing.
Habit 1 – Seeking social and environmental responsibility
Trust in the corporate has plummeted since the financial crisis with substantial blue chips collapsing, others, being involved in major scandals. Because of this, the Millennial has become more focused on Socially Responsible Investing (SRI) where an investment is considered socially responsible because of the nature of the business the company conducts. This type of investing excludes the likes of businesses selling addictive substances and will include those businesses engaging in social justice, alternative energies and environmental sustainability.
Habit 2 – A need for online technology and an increase in risk appetite and diversity
Over the last decade, the retail investor has had greater accessibility to publicly traded companies, private companies and the derivative market. This can be through traditional stockbrokers reducing fees and going online, crowdfunding platforms giving small businesses the opportunity to reach the public and spread betting companies giving accessibility to trade derivatives in equities, FX and other contracts like oil. Research shows that a third of equity investments by The Millennials in the UK are made on AIM which is the junior stock market, typically housing companies with a higher risk-reward ratio than traditional blue-chip stocks listed on the FTSE 100. They are also more likely than any previous generation to look at other higher risk opportunities within the derivative and crowdfunding space.
Habit 3 – A change in attitude towards ownership of assets
Home ownership is the big one, but this is also true of other big ticket investments such as automobiles. Millennials are shying away from actually buying assets, as renting, car sharing and leasing become far more popular. With house prices running away the younger generation, The Millennial is less able to afford more expensive assets like a home purchase and is being forced to rent, or live with parents, a rate which has risen 20% since 2000.
Habit 4 – A need for online social qualification
Seeking social qualification is as popular as ever when it comes to spending and investing with The Millennial. The average 20 or 30 something will make an investment decision based on reading a blog, seeking approval from knowledge or comparison based websites or engaging with peers on social platforms. This is the same with all of their spending, from dining at a restaurant based on reviews on Trip Advisor or a seller’s reputation on Amazon or eBay.
Habit 5 – Ripping up the rule book
The last habit we look at is the need to do things differently. The Millennial has had his or her hands tied from many investment decisions. With disposable income shrinking and historical safe haven investments like property becoming heavily taxed and unaffordable, the millennial has had to be creative. In doing so, whole new industries have been built, in especially within Fintec. As well as this, people are investing their time as employees building equity in their company of employment, in particular within the start-up seen. Ultimately, with traditional doors shutting, the entrepreneurial, resilient and resourceful Millennial is building a new door, with new opportunities, ripping up the rule booking and building their own story