If you aren't familiar with the term "Millennials," here is what Wikipedia says: "The generation born in the years ranging from the 1980s to the early 2000s." Hence, if you are between 15 and 35 years old, you are part of this group and you should read on because this article is going to be about you.
Millennials somewhat differ from their parents' generation. Obviously, they also have other needs when it comes to investments. However, their preferences are actually not that different. What's new is their high level of debt and their tech-savviness.
Most Millennials know that they should save up for retirement, but they can't because of their high student debt.
Tea Nicola, CEO of WeathBar, says that although Millenials are still at least 30 years away from retirement, they are already thinking about saving up for their old days. The reason is, that they have easier access to information than former generations and are generally more aware of the need to save money.
Although Millennials know that they should save money for retirement, many are not able to follow this advice. As the economy was losing manufacturing jobs over the past decades, education costs went up. That had already resulted in growing student debt before the financial crisis in 2008.
During the crisis, many people lost their jobs and went back to university. Undergraduates went straight to graduate school because they couldn't get an entry-level job. Therefore, Millennials are often too busy paying back their immense student loans and can't even think about saving up anything.
Millennials' investment preferences are actually not that different compared to their parents' generation.
Having that said, Millennials are aware of the fact that debt is indeed a bad thing. Paying off debt and saving for retirement still rank among their highest financial priorities. Moreover, a survey of Merill Lynch Wealth Management shows that 88 percent of Millennials also want to grow their assets.
According to this study, Millennials are actually not that different from their parents' generation when it comes to investing. They also have a strong focus on family, community and society and understand the need for diversification in order to reduce risks.
However, what's different from former generations is that Millennials tend to have more lifestyle-oriented goals, for example saving money to travel. Karen Carr, a 27-year-old financial advisor, says, "It's not all about your accumulation of wealth."
Another difference is a growing mistrust against banks and the financial sector in general. Financial institutions have lost face during the financial crisis and especially young people don't trust them anymore. Instead, they prefer to get their information from their parents or friends.
Millennials are more tech-savvy; financial advisers have to come up with new ways of communication.
Additionally, Millennials are far more tech-savvy than former generations. They participate in crowdfunding and put their money into automated and low-cost themed portfolios. FinTech companies like Trade-24 have discovered this trend and offer customized and user-friendly online platforms.
Mobile applications are especially popular. That includes mostly budgeting and savings tools. Ethan Bloch, CEO of the robot-savings tool Digit, says, "We're activating a customer segment that doesn't really get spoken to well by traditional banks."
Furthermore, financial advisers use new ways to communicate with their clients, such as online chat or video calls. Social media has become more important as well. Nowadays, advisors share their wisdom on YouTube, Facebook and LinkedIn.
Global X announced their first Millennial Generation ETF, including mostly companies that Millennials are interested in
The tech-savviness of Millennials is also the reason why Global X recently announced the first Millennial Generation ETF. It tracks the performance of Millennials' favorite companies.
Unsurprisingly, that includes mostly social media, digital media, lifestyle, technology, travel and leisure and e-commerce stocks. Bloomberg reported that the ETF does not yet have a stock ticker, but LOL and WTF would be available.
The goal of this ETF is to attract Millennials by offering a fund that includes companies and ideas which they are familiar with. Considering that about 40 percent of the age group is already invested in ETFs and that Millennials in the US will inherit about $30 trillion, such an ETF could be a great idea.