Investing Habits of Millennials

2/1/2022

Millennial investors are now between the ages of 26-40 years old, so they are in the wealth accumulation phase of their life, where investing is becoming more necessary and interesting to them.  Many have been in their careers for over 15 years and have been contributing to retirement accounts for quite some time. The overall assets and investment allocation of these investors is understandably significantly different from older generations.

 Only forty-one percent of Millennial assets are investable, according to a recent report from Spectrem Group. This is significantly different from Baby Boomers, who have two-thirds of their investments in investable assets, and WWII investors, who have 72 percent in investable assets. Gen X investors are right in the middle of these generations, with 49 percent of their total assets being investable.

Within investable assets the differences become even more apparent. Individual U.S. stocks and U.S. stock mutual funds are a similar percentage of investable assets among all age groups, however the differences end there. Nearly half of Millennials own International/Foreign mutual funds, while less than a third of Baby Boomers and WWII own those types of investments. ETFs, both international and domestic, are also more likely to be owned by Millennials than older investors. These younger investors also surprisingly are more likely to own all types of fixed income products.

Alternative investments is an area of investing that older investors have not readily embraced in their investment portfolios, with five percent or less of WWII investors owning alternative investments. Millennials are far more likely to have embraced alternative investments, however. Thirty-one percent of Millennials own hedge funds, while over a quarter of Millennials own venture capital, private equity, private placement, and future investments. 

Another type of alternative investment is cryptocurrency. This investment option has been around for over 10 years but is still very controversial in the financial industry. Because this investment has been around for this long, there are several different types of cryptocurrency options. Dogecoin is the most popular among Millennials, with 71 percent of these young investors being interested in. Bitcoin has been around the longest, and over two-thirds of Millennials are interested in investing in this type of cryptocurrency as well. 

The alternative investment space is constantly evolving, with the newest factors in that arena being NFTs and Meme investing. Three-quarters of Millennials are interested in NFT investing or Meme investing. The generation closest to Millennials, Gen X, are not as quick to embrace the emerging alternative investments, with around 40 percent of Gen X investors being interested in Meme or NFT investments.

Each generation’s asset allocation evolves as well. As investors get closer to retirement, they are more likely to become slightly more conservative. Millennials are fairly conservative in many ways right now, with the notable exception of their high levels of interest in emerging alternative investments. As this generation continues to age, and financial goals and plans change and become more solidified, their investment portfolio may evolve and change as well.