Millennials do a lot of things differently from their previous generation and it is no different when it comes to investments.
Here are 5 trends that define how millennials invest:
Millennials are risk takers and they invest more in equities. “Data shows that millennials prefer investing in equities. However, most of their equity investments are through systematic investment plans in mutual funds,” said Prakarsh Gagdani, CEO 5Paisa.com. Further, they understand the benefits of starting investing at an early age.
“Millennials are goal oriented and in fact, have various buckets to fulfil different goals. What is unique about them is that they also plan for experiences in their financial goals,” said Gagdani. So millennials would also plan specifically for experiences like watching the Northern lights or catching world cup soccer at a stadium. They are also more likely to buy high end gadgets and luxury items.
While millennials prefer to invest in goal-based SIPs they are not averse to experimenting. “As per my understanding, millennials have different risk appetites for different products. While they continuing to invest in mutual funds through SIP, many use part of their investment through direct stocks and even look at trading options. But most of them compartmentalize their investments and don’t fully indulge in one category,” stated Gagdani.The wide variety of products available and the information that is available online makes their life easier.
Millennials do not mind taking help of financial advisors when investing, but they are the do-it-yourself generation and prefer to do their own analysis before investing. They like informative content for learning and like to take informed investment decisions. For this reason they are on the lookout for quality content on investments and products.
A BankBazaar study in July 2018 found that 91% millennials believe in making their own financial decisions. Millennials also depend heavily on the social media to learn about investments and products. Apart from newspapers, magazines and websites of financial companies they would also gain knowledge from social media communities and forums like Quora.
Millennials are tech-savvy and prefer to invest through their mobile phones through Fintech apps. This makes it easier not only to invest but also to track their investments regularly and make necessary adjustments. “What they need is seamless technology, easy to use the platform without any push from the company,” stated Gagdani. No wonder we have seen the rise of several app-based Fintech investment platforms which have made investing a simple and easy process.