With globalisation and the startup boom, millennials are investing their money in a way that's never been seen before

Most millennials, you might think, don’t have enough money to even be thinking about investing any of it—stiffed by stagnant wages, rising living costs and, in many cases, crippling student debt, long-term financial planning is the last thing on their minds.

But this is less true in the relatively buoyant economies of Asia; plus the oldest of the millennial cohort, usually defined as people born between 1980 and 2000, are approaching 40, and likely to have families. The way they choose to invest, though, is changing. Here are five key ways in which millennials invest their money differently from the generation before them.


They consume financial information differently

Younger people are bombarded with information these days, comfortable with seeking out there own sources of information, and want information through different channels. “Millennials want to consume information electronically, and especially through mobile,” says Christopher Blum, head of investments, Asia for JP Morgan.

“Because information is pushed to you so often, it creates impatience—it’s hard to hold people’s attention. A 40-page white paper isn’t going to cut it. Maybe a 100-word email at the start of the day with a few links might be better. Financial services companies need to be very careful about how they put information out. This is a hugely complex thing, and we can’t oversimplify.”

They are more willing to invest in startups

A growing interest in innovation and early-stage companies suggests that millennials—more likely to be self-employed themselves—are pretty robust in their approach to risk. “There’s a big risk tolerance,” says Blum.

“Some of that’s cyclica—the entrepreneurial cycle—and there could be a downturn. We need to prepare this generation for that, and make sure their investments stay diversified. It’s also about return and risk expectation setting. The headlines about start-up people getting rich affect expectations. It affects every generation, but it’s so much easier now to find out about it.”

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They want their investments to do good

Millennials are more likely to want to invest in ways that align with their personal beliefs: that means socially responsible investments and in particular impact investments. “I see the millennial generation sharing different values compared with their parents: they’re more socially conscious and environmentally friendly,” says Fan Cheuk Wan, head of investment strategy and advisory, Asia for HSBC Private Banking.

“There’s an increased interest in investments that will make a positive impact. It’s embedded in the investment objectives of our younger clients. ESG [environmental, social and governance] investing is also becoming increasingly popular in this region because of the urgent environmental problems we face.”

They embrace globalisation

Millennials have never lived in a non-globalised world, and so they’ve come to accept its disadvantages—and embrace its advantages. This, says Fan, often makes them wiser investors.

“They accept the value of global asset allocation. The older generation are more likely to invest in what they know; they love to invest in their home market. The younger generation understands that global diversification will help them achieve their goals. Plus they have access to information on a much wider universe of investment opportunities.”

They’re failing to plan for retirement

This, of course, is a problem in every generation, but it’s exacerbated in one where state systems in many countries are breaking down under the impending population timebomb; investable cash can be in short supply; and everyone is bombarded with information about a plethora of far sexier-sounding investment options.

Failing to plan for retirement is pretty inadvisable, however, especially as some millennials are only a couple of decades away from it. “It could just be that no one’s thinking about that stuff yet,” says Blum. “I think they need to. But people tend to be reactive, and this generation will be the same.”

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