Unlike previous generations, millennials are disinterested in the stock market.
According to Llewellyn Morkel, founder and CEO of ProsperiProp, millennials are not necessarily looking for safer options, but rather quicker returns.
“Millennials, more than any other adult demographic cohort, have grown up in a world influenced by technology, and rewarded with instant gratification,” Morkel explained.
“Access to the web, and the wealth of information available online has led to a generation who expect fast results – always,” he added.
According to Morkel, millennials don’t know how to work towards long-term goals, build trust over time, or nurture meaningful relationships. Instead, they are used to systems and processes that require minimal effort.
“The stock market, in the traditional sense, is quite the opposite of this,” he declared.
“Purchasing shares requires detailed research and analysis. It requires a keen interest in market economics and a deep understanding of how businesses make money. Then, once you have made your investment, you wait,” he explained.
“Millennials have grown up in an age where more and more millionaires are made overnight, and where anyone can own their own business. So, in my view, most would rather invest the money in their own venture as entrepreneurs and hope to make it big quick,” he said.
Elize Botha, managing director of Old Mutual Unit Trusts, explained that based on their research, “Millennials are ‘saving’ their money, rather than investing it.”
According to this year’s Old Mutual Savings and Investment Monitor (SIM), on average millennials prefer saving their money though building a positive balance on their credit card, giving money to their loved one’s for safekeeping, or stashing it under their mattress.
“The Monitor also revealed that 22% of South African millennials rely on informal vehicles, such as stokvels to save their money,” said Botha.
She believes that millennials are less likely to use unit trusts and exchange-traded-funds because of the perceived complexity of investing.
“There is also a misinterpretation about risk and the fear of losing capital, and because of this, many opt for ‘safer’ options, such as leaving it in the bank. But what they may not be aware of, is that this isn’t always the best for your money in terms of growth and returns,” Botha insisted.
Additionally, she also believes that millennials are sceptical of established institutions, and that they want to invest in businesses that are more about people and the planet, than profits.
Morkel points out that millennials are becoming known as ‘Generation Rent’ because they simply cannot afford to buy a home.
In contrast to the Baby Boomer generation, where everyone was determined to make money and showcase their assets, Millennials prefer to spend their money on experiences.
Morkel urged, “Putting money away is important and you can never start too early.”
He advised that instead of relying on an expert’s opinion, millennials should find something they are passionate about and then get expert opinion about investing in that.
“If you decide to invest in a start-up company, never invest in something that you can't fix yourself when it breaks. So put your money where your heart is and your mind will follow,” he encouraged.
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