Forecasting the Investing Habits of the Millennial Generation

Forecasting the Investing Habits of the Millennial Generation

According to Accenture, millennials are set to inherit the biggest wealth transfer in history, amounting to an estimated $30 trillion over the course of 30 to 40 years.

While it’s hard to know what this newest generation of investors will do once the funds hit their accounts, there is no shortage of speculation about the habits and attitudes that will characterize their collective approach to wealth management as they age.

Surveying Millennial Investors

Today’s infographic is the result of a partnership with our friends at Morning Brew, a daily business briefing newsletter that skews towards a millennial audience.

It showcases the results of their recent audience survey, which had 9,800 respondents from North America and Europe. All respondents fell between the ages of 18 and 35, representing a group that roughly equates to the business leaders of tomorrow.

The survey’s aim: to get a peek at their current financial habits and attitudes towards investing.

Who is Investing?

Of the respondents, a majority of 68.1% is employed full-time while another 27.6% identified as students. The remaining 4.2% is employed part-time or answered “other”.

Financial goals for these respondents were quite diversified, as seen below.

Primary financial goal:

• 23.8% – Earning a graduate/master’s degree
• 21.5% – Buying a car
• 19.6% – Getting married
• 19.0% – Buying a primary home
• 7.3% – Opening a business
• 6.4% – Having a child
• 2.3% – Buying a vacation home

It’s worth keeping in mind that people in this segment can be at very different stages in their lives. Those at the lower end (18-22 years) are just starting their adult years, while those at the higher end (30-35 years) can be quite a ways into their professional careers.

Portfolio Size and Composition

The vast majority of the cohort surveyed said they invest (89%), with the most common bracket of money invested rising steadily as respondents got older:

• 18 to 22 years old: $1,001-$5,000 (31.7%)
• 23 to 27 years old: $10,001-$50,000 (36.7%)
• 28 to 35 years old: $50,000+ (42.0%)

Not surprisingly, technology was the preferred sector to invest in for many in the pool of respondents. Nearly half of people (49.7%) said tech was their favorite sector, with healthcare (12.1%), energy (11.5%), and real estate (9.9%) appearing on the radar as well.

Many sectors were underrepresented here, with financial services (5.6%), consumer staples (4.8%), and consumer discretionary (3.1%) having a relatively low amount of interest. Even worse off were the utilities, industrials, telecommunications, and materials sectors, which held virtually no interest (<2%) among millennial investors.

Millennial Investing Habits

Millennials rate their level of expertise in investing as pretty limited, with only 18.3% of respondents expressing that they had high confidence in their own investment abilities. This is a finding that is consistent with the growing financial literacy problem in America.

The respondents preferred the human touch of financial advisors (70.2%) to robo advisors (29.9%), and were lukewarm towards social impact investing with only 21.1% seeing it as being very important.

As a final exclamation point on the survey results, millennial investors were very clear on what was important to them, and it’s low fees.

When asked how they decide on a professional service, 42.4% saw low fees as a top three deciding factor. At the same time, simplicity (11.6%) and breadth of asset classes (13.1%) were well behind in importance.