Investing for Millennials by a Millennial Investor
Investing for Millennials by a Millennial Investor
Millennials, the cohort aged between 24 and 39, have often been described as the first generation that grew up in the Internet Age. Their inclination towards new technologies and sustainable investing also identifies them as young investors with crucial roles in today’s economy.
To dive deeper into what drives them and their investment decisions, Michelle Martin spoke with Tim Phillips, Head of Content & Investment Lead @ ProsperUs by CGS-CIMB Securities on Money and Me, to find out more.
Michelle Martin: Why should we care and what investment trends are being pushed by Millennials?
Tim Phillips: Well, mainly because Millennials are the ones who are going to have a massive increase in disposable income over the next 10 to 20 years.
Millennials tend to show interest in things that they can relate to on a daily basis, such as gaming and purchasing goods online. These are habits that are becoming more present in our economy and their importance in society will continue to increase over time. So, the trends you see in terms of what Millennials are buying today – and investing in that sense – will drive the development of the global economy.
MM: Do Millennials have that much money now to be a force to be reckoned with in the investment world?
TP: Yes. Millennials are actually starting to earn a lot more and are seeing an increase in terms of their purchasing power. They are saving more now and are putting their money to good use. As Millennials, we are not in the position to grow our wealth as fast as our parents or grandparents due to the way asset prices have increased over time. So most Millennials would want to start early and when they are younger.
MM: What are you seeing Millennials gravitate towards? Would it be higher growth US Stocks?
TP: Yes. Generally, it would be high growth US stocks. And cryptocurrency, as it has that “decentralised” feel to it [where everyone feels like they are investing together].
For high growth stocks, we are looking at goods that are being purchased. This could be Shopee or Free Fire, a SEA limited mobile game. Millennials are familiar with these companies and we have also seen games and such platforms increase over the past year due to the pandemic. They are not buying old school tobacco companies and will mostly look for stocks and companies that can provide a service, benefit the environment, or simple align with their values. It is not purely a profit-driven market for young investors, they want to relate with the companies that they buy into as well.
MM: Are Millennials also putting money into companies they want to see succeed? Like Tesla for example, since there could be an aspiration to own one.
TP: Yes, that definitely is one reason. I think their [Tesla's] mission to move towards the mass adoption of electric vehicles for the automobile industry, is what makes Elon Musk and his company ideal for many young investors.
MM: Let’s take a look at South East Asia (SEA). If Millennials are not looking at profit or loss, what are they looking out for?
TP: I think they are looking at the massive Total Addressable Market (TAM). When you look at the e-commerce penetration rate in Southeast Asia, it is ridiculously low. Even with the growth of online sales this year, it is only estimated to make up about 5% of overall retail sales. So, one would be thinking of the growth in SEA, which would be massive.
MM: Millennials and Cryptocurrency. Are they picking Bitcoin and Ethereum, or are they diving into the Altcoins where they can make money with?
TP: We are definitely seeing more than diving into the speculative [investments]. As for Bitcoin and Ethereum, they are becoming more mainstream and I think sizing a position is not that crazy if you are talking about taking an initial position and see how it does. It is also whether you become comfortable with the asset class.
[Cryptocurrency] is the future, at least in terms of the technology behind it, and we will definitely see more young people investing in it. Whether it all ends in tears, we shall have to see.
For more, tune in to Your Money with Michelle Martin on weekdays from 9AM to 12PM.
This interview was broadcasted on MONEY FM 89.3 on 20 September 2021.
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