Sociologists organised the last three adult generations in three groups:
- Baby boomers, born after the WWII till the 60s of the last century.
- Generation X, born between the 60s and the 70s.
- Generation Y, born between the 80s and the end of the 20th century. These are also known as millennials.
The millennial generation is a group in which many sectors are pointing their eyes. This is the last generation that has come into adulthood. They are digital native and their behaviour is substantially different from other older generations. They are accused of laziness, narcissists and eternal teenagers incapable of commitment. They also perceive themselves negatively, as the global perception is negative.
However, they represent around the 20% of the UK population. They are already relevant players as consumers and they will be soon as investors. What is their behaviour for investments?
The survey Schroders Global Investor Study found that the millennials prefer to invest in ETF instead of investment funds (90%) and they are quite optimistic, as they expect a 10% level of income from investments (let’s compare with the current rates or the returns from some exchanges). They also consider themselves as a group with better understanding of investments that the average people.
Other figures obtained from this study point out that this generation have a short-term investment outlook (less than 2 years), but on the contrary they are risk averse, prioritise capital preservation and look for investments with a return higher than inflation. Meanwhile, their financial situation is not the best possible, as they are highly in debt (studies, mortgages). That is why they expect that investment returns can be a supplement for the salary or to the future pension.
Schroders says that the mix is unrealistic and even “toxic”, because they have high returns expectations but reject risk and their incomes are not specially good. They are replacing the older generations with new values and ideas, but it seems that they are confused about some concepts. So, the millennial generation needs possibly more financial education and help to organise their finances.
The financial sector does not have to wait and see, because this generation is the present. Their use of technologies is a positive point to develop new products and services focused in their needs. It is a question of time that they become a relevant group in investments, because their incomes are currently lower, but there will be a evolution in the next years.
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