Millennials and Money: A New Era of Accessible, Purpose-Driven Wealth
With technology at their fingertips and a desire for financial independence, Millennials are turning to alternative investments to build wealth on their own terms. After watching Gen X struggle financially through multiple economic crises and rising inflation, Millennials are wary of the traditional systems for building wealth. After navigating the rise of technology and social media, Millennials are taking advantage of the recent democratization of many types of alternative investments. With innovative technology that allows them to trade stocks on their phones, this generation is rewriting the financial rules.
Coming of age around the time of the dot.com bubble burst, the 9/11 terror attack and subsequent war, rising college costs, stagnant wages, and the financial crash of 2008, Millennials have endured a lot. They saw what didn’t work for previous generations and developed a critical eye for investments and a mistrust of traditional institutions. This is likely why innovative Millennials have pioneered online platforms and apps that allow users greater transparency and more control over their investments than with intermediaries like wealth advisors. These options have also led to the popularity of fraction shares, crowdfunding, and other democratizations of investments, especially in the alternative investment world. Millennials prioritize real-time data, self-directed options, and automation that allows them to seek out and invest whenever it’s convenient to fit it into their busy schedules.
Millennials are serious about using their money to do good. They are future-oriented, community-minded, and environmentally conscious. With them, personal values and investing go hand-in-hand. Social impact is important to them and Millennials have sought out socially responsible investments (SRIs) and companies that align with environmental, social, and governance (ESG) criteria so often that traditional institutions are adjusting their offerings. Major financial firms are now integrating more sustainable investment opportunities and ethical business practices into their portfolios.
While Millennials are increasingly drawn to non-traditional assets, such as venture capital, private equity, real estate fractional ownership, and crowdfunding opportunities, many of this generation have little to invest. While being willing to take risks by self-directing their investments, they are conservative with how much to invest, not having much to work with. They are also cautious about future market downturns, which they have seen happen so often. Diversification and liquidity of investments are important to this generation. They want to minimize overall risk, especially during times of global uncertainty and political instability.
While Millennials lead the way in innovation, many of them find it difficult to accumulate enough money to become accredited. This is why they are turning more and more to solutions in alternative investments, as owning fractions of the housing market, private equity, and crypto is better than none. For Millennials looking to balance financial growth and their values, strategic investing is key. Self-directed investing in apps is a great way to start but it should be balanced with advice from advisors to avoid pitfalls and ensure they are on track to achieve their financial goals.
As the great wealth transfer from the Boomer generation makes its way into the hands of Millennials, they will have more ability to change the world by investing in what they value. They will continue to rewrite investment norms and financial companies must adapt to a new era where accessibility, impact, and innovation take center stage.
Want to dive deeper into how Millennials are shaping the future of finance? Tune in to the Alternative Investments Chat podcast, where our hosts discuss the latest trends in alternative investing and the strategies that can help you build a smarter, more impactful portfolio.
