Millennials are generally classed as those born between the early 1980’s to the mid 1990’s.
Stereotyping any generation is misguided, and while all generations face their fair share of negative press, millennials seem to bear the brunt of the media’s negative headlines, especially around money matters.
They have been accused of wasting their money and spending too much on coffee and avocados, while simultaneously getting heat for not spending enough, and killing the napkin, cereal and golf industries to name a few! However, the topic of millennials investment habits is not talked about often.
Almost half (47%) of those aged 18-24 prefer to put their money into a current account,with only 5% of this age group opting to invest.
With interest rates at record lows for the past few years, current and savings accounts may not be the best option for millennials wanting to grow their cash over the medium to long term.
Investing is a great way to prepare for retirement as products like our Self-Invested Personal Pension offer tax relief (which you can find out more about here) as well as tax protection benefits. Many millennials are wanting to retire sooner, creating movements such as FIRE (financial independence retire early) which originated in the US. Millennials are also being expected to live longer than boomers or gen x-ers, so millennials should be investing at a younger age than previous generations.
As with all investment the sooner you can invest the better. This is because your investments can generate interest and returns, reinvesting that means you start to make interest on your interest, this is called ‘compound interest’ and can make a huge difference to your investment pot over the long term.
Millennials are conscious about where their invested money is going and what it will be supporting. Ethical investing is more popular among millennials than any other generation. If you want to find out more about ethical investments and OpenMoney’s stance on it, you can read this blog here.
For those investing in their property, Help to Buy ISAs are a government initiative investment product, available to first time buyers who are saving to get onto the property ladder. The Help to Buy Scheme has supported over 230,000 property completions since December 2015 and of those using the Help To Buy ISA, 29.9%were aged 19-24 while 69.4% were aged 25-34.
Millennials grew up in a time where family members may have suffered as a result of the famous market crash in 2008. This means that millennials can be more cautious with their money, it is also clear that education about investment is lacking.
In a piece of research conducted by Barclays, 40% of those surveyed claimed that not knowing enough about investing is one of the biggest barriers to investing. This is something we at OpenMoney are addressing, we want to close the advice gap and make financial advice accessible to all.