The stock market and property investment aren’t the only ways to make your money work hard for a living. Now that Millennials and Gen Zers are entering their investment era, there are a range of considerations to factor in as the financial market undergoes an evolution.
While the two generations may have different values, their investment decisions are driven by some of the same factors, such as technology, ethics, and a steep rise in the cost of living. Together, they’re reshaping the future of investments.
The digital investment boom
You don’t have to be wealthy to make good investments. With robo-advisors and digital investment platforms becoming the norm, it’s allowing Gen Zers to enter the investment market much earlier than previous generations. According to Investopedia, the average starting age is 19, and the up-and-comers are starting with micro-investments to build their wealth before branching out. Still, the majority of their investments are in cryptocurrency and 65% are using an app to make their moves.
Millennials are on the crypto train too and given that the oldest Millennials are 44, it’s no surprise that they’re happy to embrace technology but still mindful of corporate responsibility, climate change, and global awareness.
Social media is also influencing the way the younger generations invest because with influencers taking to various platforms to offer tips, it’s becoming much more accessible. It’s so easy to hop on Reddit to get advice on the risk of certain investments and there are YouTubers and TikTokers handing out free advice daily.
Ethical investing
While the older generations were more than happy to take money wherever it came from, the younger generations are more mindful of corporate responsibility. People are more in touch with their values and if a business doesn’t align with their environmental ideas or social values, they won’t invest with them. It’s as simple as that.
As a result, there is an increasing interest in long-term global sustainability funds, ethical ETFs, and green bonds.
The trends
According to a recent survey, stock investment remains consistent across all ages, but crypto is the biggest trend for the younger generations, while the older generations stick with real estate, mutual funds, and bonds. With rising housing costs making it difficult for people to get on the property ladder, it’s not a great investment opportunity for most.
There are some Gen Zers who like to trade crypto and stocks actively, and many of the youngest generations prefer to invest in index funds, managed portfolios, and ETFs so they can set it and forget it.
As far as managed funds in Australia go, it’s an accessible option if you want to invest and let someone professionally manage your money and diversify your portfolio. That way, you have the benefit of professional oversight.
Angel investing in startups has become a popular option as well, and while that does require a significant investment, others choose to do gig work to earn additional income to reinvest in digital assets.
Alternatively, you can consider fractional investment. There are a range of investment options available allowing you to overcome the barriers by owning a fraction of a property, or even cryptocurrency or collectibles. Everyone has to start somewhere.
The financial realities
It’s tough out there, and with the cost of living climbing, many youngsters are struggling to get the balance right. You still have to cover your daily expenses and housing costs, so how do you invest while saving up for a house deposit?
Gen Z, in particular, has shown the possibilities, thanks to apps and fractional investments. You don’t need a lot of money to start your investment portfolio. You can start small with incremental investments and work your way up to bigger risks or larger investments. Start by checking out social media accounts offering advice and tips before you take the plunge.
Summing up
Millennials and Gen Zers are already reshaping our financial landscape, the question is whether you’re ready to get on board with those changes or you’re content to sit back and watch everyone else make the money.
The benefit of these changes is it’s more accessible to everyone, and you don’t need large amounts of money to get involved.
