A recent survey by Investopedia found that millennials face the most uncertain financial future since the Depression. Facing lower-paying jobs, increased unemployment, and student loan debt make it more difficult for them to get on their feet and stay there. In addition, the older millennials that do manage to stay on their feet face ten to twenty years of lost retirement funds.

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Millennial Investing Philosophy

Millennials have been shaped by 9/11 and the Market Crash of 2008, which created their sense of social responsibility and environmental concerns guiding where they place their money. Pair this with their ideas that financial advisors and parental financial advice are one-sided, and you can see that they are using their instincts to make decisions about their money. Unfortunately, I believe their parental and financial professional advice misconceptions may lead to bad decision-making in investing. Investing based on perception is not a well-guided plan for investment.

The same study cited that millennials who make upwards of $132,000 feel knowledgeable in investing but are prone to use a financial professional. The majority of millennials prefer to use online tools and platforms, with a slight majority who prefer a personal relationship with a financial manager.

If you’ve read my Pension and Portability blog, you think pension portability, if passed, will give these millennials a point of reference, financial go-to. A manager to follow their money goals and help alleviate the suspicion of these professionals. They will be a source of sound financial advice from someone they have learned to trust. Realistically, if I don’t trust you, you aren’t going near my money either, and I’m a parent of millennials …so those apples have fallen very close to the tree!

Questionable Spending Habits

We recognize that social media has been ever-present for millennials. Social influences and a new level of keeping up with the Jones have impacted their spending. They want the same techno gadgets(starting with the $1500 phones), cars, and clothes plastered all over social media. They want to look good(a 2018 survey showed that surgery and injectables were up by 72% in people under thirty); that’s a lot of self-doubt about your looks some costly fixes.

The scarier truth is millennials are using credit cards to pay for needs, not wants. One-quarter of them are making late payments or dealing with debt collectors. Some are still getting monetary support from their parents. Although this generation was given many things, there is inherent value in earning money to pay for what you need and saving for what you want. Things take on a greater value when you have worked hard to get them.

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Before we start manking on millennials, we need to start with their parents. Did we teach them about money? Were you the model saver, money miser, and making only good investment choices? Kids learn what they live if you were good with money and saving; chances are your millennials are probably good with money. Unless…they are independent thinkers and they choose the dark side to money management, leaving them broke or in debt. Pair this with lower-paying jobs, student loan debt, and stir in our present economy, and the millennial financial future looks pretty bleak!

I can’t imagine starting a career to have a pandemic slow it down or shut it down completely. How do you stand on your own two feet when you have no source of income. This is a double whammy to twenty-somethings who are learning to sink or swim in this economic mess.

Making the Most in a Pandemic

Millennials have used their lifelong exposure to the internet, making and managing money on online platforms. This is very evident in the way they spent and saved money during the pandemic lockdown.

Many of them spent the beginning of the pandemic purchasing things they had been longing to buy, racking up credit card debt and small personal loans. Then, as the pandemic continued and things were closed down, panic began to set in when the money needed to pay off the debt and loans wasn’t being earned.

Millennials answered the need for income with the stock market, cryptocurrency, and other risky investments. I don’t think it was just the millennials that spent money on wants then realized covid wasn’t going away. Using drastic plastic (I pulled that term out of the eighty’s!) and short-term loans to dig themselves out (while only digging themselves deeper in debt when that choice turned into compound debt interest).

Millennials used their access to the web to keep track of cryptocurrency, stocks, and other investments at an age where they can take investment risk: being reasonably well educated and young enough to take a chance.

Crypto investing is very popular with millennials: their understanding of blockchain technology and its use have given them an investment edge. Therefore, Crypto investment to create passive income has attracted this generation who is using it and doing very well.

Anyone who invests or is interested in investing needs to embrace blockchain technology and its future in investing. However, here is where we older dogs need to learn a new trick. Lol!

They also took advantage of their time at home to build on the skills they already have: using digital skilling and upscaling platforms. The ability to increase their skills brings higher wages, with the fees paid on the upskilling platforms paying for themselves with the improved wages.

There is also a strong likelihood that upscaling platforms will replace some college-based courses due to being well developed, cheaper than college courses, and easily accessible from computers and mobile phones all over the globe. This is going to have a significant impact on gig-based freelancing jobs in the future. I myself used upscaling to create my own freelancing business this past year, leaving behind a forty-year career in healthcare with no regrets.

Millennials are using their knowledge to create niche-based videos and blogs. While Baby boomers and the silent generation scoff at this, there is excellent educational information in this content, and it can lead to big money if it is done well.

If you’ve read my blogs, you know I tout the millennials as the out-of-the-box thinkers; these young adults are genuinely the entrepreneurial generation. I am somewhat humbled and frequently awed by what they are doing.

They have taken full advantage of our gig economy and freelancing opportunities, creating sustainable employment for themselves. In addition, they have embraced auto-debit, tying it to their paychecks and automating their contributions to their investment platforms, ensuring contributions with each paycheck. Consistent investing is the best way to build your wealth; they have made this effortless with technology.

They have created their own version of pension portability (see my blog on Pension Portability) by making these accounts without employer pension funding and their ability to invest their paychecks no matter where they work. So, although freelancers must currently create their pension options, millennials have come up with a way to fund future retirement…both out-of-the-box and intelligent!

Investing millennials understand the need to diversify; they are creating diversification through digital borrowing and lending platforms. As a result, some produce returns in the double digits, leading to higher passive income. This is a new spin on a solid investing strategy that investors have been using for years.

Digital gold investing is popular with this generation as they look for ways to invest easily with high returns. Digital gold can be bought and sold on a mobile phone without using a professional manager. There are no fees to be paid, and you can purchase as little as you want or as much as you can afford, making this perfect for investing millennials.

Property investment platforms allow millennials to purchase shares of properties (primarily rental in the commercial real estate sector), earning a passive and stable income. The younger they invest, the more they stand to make. Studies have shown that 30% of millennials are taking advantage of these sites. Given how long they have until retirement and how these investments return, this generation could have one of the most well-funded retirements in ages.

What Millennials Are Doing Right

Millennials have gotten an unfair rap, often being called lazy, spendthrifts, and job-hoppers. However, despite the negative labels given to them by generations who think they did it better, millennials are doing better with less money than their siblings and parents.

Having recognized the uncertainty in the economy (they have lived through two decades of economic ups and downs and have been very observant). They tend to start investing around age twenty-three after several years of financial freedom and learning how to budget, save and live within their means. That is seven years earlier than Gen Xers and seventeen years earlier than Baby Boomers. It seems they’re not as spend thrifty as we thought they were.

Despite low wages, student loan debt, and a rough economy, they are managing to save more than their parents and older siblings did at their age. They understand that investing and saving a small amount is better than none at all. They may not have lots of money to invest, but they’re doing it earlier, making such a difference in their retirement funds.

They don’t dip into their 401ks, retirement savings, or IRAs as past generations have done, despite having student loan debt, poor wages, and living paycheck-to-paycheck. Instead of having less to save and invest, they leave the money in the bank and investments to earn the interest they will need later in life.

They have absorbed and digested information through media, network better than any generation before them and are more likely to talk to their peers about finances and investments. Their ability to handle the money they have and invest, comes from their self-assurance that past generations did not have.

Their debt and lack of pocket cash make them less likely to spend money they can’t afford. It doesn’t matter why you spend less; they realize they don’t have it to spend, which makes them much more selective on what they spend it on.

Between all three generations, millennials are the ones who save the emergency fund. The internet and tech give them access to and allow them to monitor their expenses, making savings, spending, and investing decisions easier. I think it is fair to say that Millenials are more tightfisted with their money than the Gen Xers and Baby Boomers.

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Where Their Investment Interests Lie

Being self-investors millennials, can monitor their costs, put in as much money as possible, and grow their investments over a long time. They learned how to benefit from the stock market through watch and learning, which serves them well. Staying with an investment for the long term and diversifying has taught them not to gamble on one or two hot stocks.

Millennials invest in companies with a mission and cause they identify with, investing in what they value. This is referred to as ESG, environment, social and corporate governance, a set of standards under which the company operates. How eco-friendly the company is and how it manages its relationships with customers, other companies, employers, and suppliers. It also encompasses the leadership of the company, shareholders’ rights, and executive pay. That is so much more information than we have used in the past. Most of us are concerned with the stock’s price, the history of their profits, and what we stand to earn. Never once have I thought about the shareholders, the company’s policies, attitude towards their employees, or the companies they deal with. Don’t get me wrong, if they had repugnant practices, I wouldn’t invest in them. Still, my list of things to know falls very short of the millennial query! I applaud the millennials in their decision to look at everything the company stands for; how they treat people and the environment is just as important as a good return on your investment.

The Future of Investing

Millennial investing looks and feels much different than what has been done in the past. The use of zero-commission trades has left millennials with extra money to invest with a potential earning of thousands of dollars in compound interest.

Micro-investing (small amounts of money consistently invested in exchange-traded funds or ETFs) and fractional ownership (a percentage of ownership in an asset) has millennials money working for them. This has also given people of all economic backgrounds the ability to invest small amounts of cash in their future. However, it is certainly a far cry from saving your change in a five-gallon water jug to be placed in savings when it is half full. No one is retiring on the water jug method of saving, that is for sure!

Many fear millennials are “gameifying” investing, treating it as a game, a get-rich-quick scheme. As a result, social influencers and social media are promoting get-rich-quick investing tips that are proving to be extremely risky and have caused people to lose large amounts of money quickly. Thus, reinforcing the need to educate yourself about an investment first.

When you look at how millennial investing differs, the “old school” investment strategies are the same. Thus, the need to educate yourself on everything from allocation to diversification remains sound advice rooted in a history of investment success. In addition, the types of accounts from the 401K to a self-directed IRA are still tried and true investment tools and will probably be around for a long time.

They still need to diversify their portfolio and understand what they are investing in. Know what they can afford to invest and how much they can afford to lose. They will still need a financial plan, even if they don’t need a financial planner.

It is the way they invest, the use of technology, and new investments like cryptocurrency and micro-investing. Hence, their usage of online platforms and the savings found in using these platforms. But with all of this comes a weariness, the worry that your information has come from an internet charlatan who has no experience but has a great profile, charismatic personality, and great how-to videos. Millennials will have to be aware of the scamming that comes with social media and influencers.

The number of millennials investing will change the investment climate as money floods the market in small or large amounts. It will be interesting to see its effects and how the market will react to it all. One thing is sure, what the millennials invest in and how they vet the investments will change the environment, how the companies will operate, and bring about greater sustainability and kindness to the world that we have managed to lose along the way. I hope I live long enough to see and appreciate what is coming; I feel it will be spectacular in its own right.

If you’re looking for more Thoughts of a Random Citizen, head to the podcast section. I think you’ll find some fascinating podcasts to listen to.