Different generations, different investment needs? - September 11, 2019

Different generations, different investment needs?

We all know that new generations often think differently about the world. Does that involve investments, too? According to a study, the answer is a firm yes.  Younger generations are more active, and they need high-tech solutions for their investments.

Millennials (and Gen Z) are entering the investment scene, bringing possible changes to it. Why? Because these two new generations have very different wishes and needs about their investments than older people. Raconteur gathered the most important differences in this breath-taking infographic for easier understanding:

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Although this image speaks a thousand words, let’s look into the most important parts of this graphic, too!

They think about volatility

Most importantly, Millennials and Gen Z are thinking about volatility. According to the study, 82% and 69% respectively made refinements of their portfolios due to market changes. Only 47% of baby boomers did the same.

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Of course, a lot depends on what kind of changes they made, but sadly, that isn’t something that the study looks into. Why is that a problem? Because change can be a positive and a negative thing as well. Actively managed portfolios, however, are often a good thing. Just like knowing about volatility. This can easily lead to conscious decisions instead of emotional investment, which is something best to avoid.

They’re more positive

Although younger generations think more about volatility, they’re also the ones that are more positive about the market environment. More than half, 66% of Millennials said that they were very confident or quite confident about investment opportunities in the upcoming months. Only 49% of baby boomers said the same.

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They’re also more positive about how they see their financial savvy. Almost half, 42% of Millennials said that they have advanced investment knowledge. That’s almost double than the 23% baby boomers.

They need high-tech solutions

Younger generations also need tech-based solutions. 67% of them said that they “want computer-generated recommendations as a basic component of their investment platform”. That’s more than double of what Gen X and baby boomer investors want. That’s a huge difference that shows how priorities shifted lately. Millennials also like one-stop app solutions on how to manage their personal finances and investments. Only 35% of baby boomers have this need, while 66% of Millennials need a service like this.

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What’s our takeaway?

The rise of actively managed portfolios isn’t a surprise to us: we believe in it ever since the beginning. Big data and AI solutions are also widely used to understand (and even predict) market movements better. The rise of all-in-one financial and investment solutions (with strong app-support) is also something that we have seen for a while now.

The huge shift that new generations might bring is that these won’t be a luxuries or a “nice-to-haves” in the near future, but a must-have for successful investments.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.