Investing and Money Habits of Millennials

Kim taps on the trading app on her iPhone, buys 100 shares of Yahoo, flicks off her iPhone and continues to eat her lunch. “If Yahoo spins off a division this year as planned, the stock should rise at least 15%,” she says to the 23-year-olds sitting with her in the hipster cafe.

A day in the life of millennial investors – iPhone-carrying teenagers who read investment market classics on their lunch hour. The generation that grew up as Singapore transformed into a global financial centre (early 1980s – early 2000s) will have more money to invest than any generation before it. In North America alone, over $30 trillion in financial and non-financial assets is expected to be passed down to them from baby boomers.

Money Habits of Millennials

The young investors among the Facebook, or Y, generation are motivated by financial security. The Millennial generation is not depending on social security. Ninety percent expect to receive no benefits or a reduced level of benefits from what their parents will receive, according to Federated Investors. Others from the generation that grew up role-playing in video games want to be financiers and hedge fund managers. This was the motivation of the majority of millennial investors interviewed for Business Insider’s 20 Under 20 in Finance.

While millennials are considered a different breed of investors, Singapore millennials are an even more distinct class of investors. Female Singapore millennials are the most financially independent women in the world. While globally women make less than men and save less for retirement, 69% of Singapore women earn equal or more than men versus 66% for the global average, according to PricewaterhouseCoopers.  They also consider competitive wages and financial incentives more important than career goals when seeking employment.

• Investment Habits of Millennials

Conservative Investors

While aggressive 23-year-olds with large stock holdings and stock shorting prowess to match George Soros get a lot of the press, most millennials have a conservative investment style. A generation that prefers cash to credit, 43% consider themselves conservative investors versus 31% for baby boomers. An average portfolio holds 52% in cash versus 23% on average, finds UBS. If fact, many millennials prefer low interest, dividend paying bonds but amass stock holdings through retirement plans.  While millennials have a more aggressive attitude towards becoming investors, they are the most conservative and knowledgeable generation of investors.

More Money to Invest

More millennials receive higher education than any generation before them.  Singapore female millennials are less likely to engage in behaviour that lowers the financial well-being of women. They prioritise money when seeking jobs, and are less likely to leave a job to start a family. They are more likely to be promoted, trained and retained. Singapore workplaces have the highest rating on gender diversity.

Seeking Solutions and Meaning

Millennials are taught that businesses want problem solvers and solution developers, and are educated accordingly.  There is a model for everything. They also seek meaningful work and investments. They want proof that their investments align with goals and purpose, and are going to work for them. Social impact investing is part of their portfolio mix.

Trust is an Issue

The majority of millennials view businesses as out to promote their own interests. They more often turn to trusted friends and family than financial professionals for investment advice, says UBS. Millennial gather financial information and advice across traditional offline and social media networks, including Facebook, Twitter and webinars. They are more likely to be influenced by recommendations by friends who have had positive experience with a product or service.

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