A Morgan Stanley survey in 2017 showed millennials — also know as Generation Y — are twice as likely as other investors to put their money into companies or funds that target social or environmental outcomes, rather than the more traditional routes of investment. Studies show that 40 per cent of millennials are not invested in the stock market.
86 per cent of those millennials surveyed by Morgan Stanley are interested in sustainable investing, believing that their investment decisions can influence the issues they care about, proving their investment decisions are not just based on their personal growth in wealth. This is a theme throughout their life choices, with them three times more likely to work or apply to a company because of its stance on various social and environmental issues.
According to the survey, three quarters of millennial investors believe that their investment decisions can influence climate change and 84 per cent of them also believe their investments can help reduce poverty.
Fidelity Charitable found that 77 per cent of affluent millennials had made some form of impact investment such as investing in a publicly traded company with good social or environmental practices, compared with just 30 per cent of affluent non-millennial investors.
92 per cent of millennials agreed with the statement "I care more about having a positive impact on society than doing well financially," compared to 52 per cent of older generations, according to a survey by Nuveen in 2017.
A Bankrate survey found that 30 per cent of millennials see cash as their preferred investment where all other generations said they preferred traditional stocks.
In New Zealand, an online company started by millennials, for millennials, is helping guide them in their investments with the aim to make investing easy: 'We want someone with $50 to have the same investment opportunities as someone with $50,000,' says Sharesies.
Wannabe investors can sign up and invest any amount into their choice of 18 funds at present, with three of these considered socially responsible. Fees range from zero for less than $50 invested to $30 a year for any portfolio value.
Launched in 2016, Sharesies now has 44,000 customers with nearly $52m in funds under management, according to a recent press release from the company, which was announcing they are now a certified B Corporation. B Corp companies are those that 'have the desire to reduce inequality, lower the levels of poverty, create a healthier environment, and build stronger communities' and Sharesies is the first financial services company and the 22nd company in New Zealand to gain this status.
Back in October 2018, Sharesies sold a 16 per cent stake to Trade Me for $14.11 a share, valuing the company at $24.4 million and ramping up the portfolio value of its early investors.
The millennial investor now uses social media platforms and other tech-based apps to do the research in where to invest and are spending as much as 18 per cent in investment, compared with 11 per cent of Baby Boomers, say Asset Management company BlackRock.
The Wall Street Journal reports that more than one third of millennials are more loyal to brands that keep up-to-date with technology and say that technology adds value to a brand. The same study cited that 57 per cent of millennials prefer an app experience over a mobile web browser experience.
Start-ups are enticing young investors with user-friendly, low-cost, mobile-enabled tech, with millennial investors wanting straight-forward options and clarity in their potential investments.
Similarly to Sharesies, UK company Wealthify was founded to make it easier and more affordable for people to invest with the clarity they desire. They promise "No complicated jargon, no daunting fees, just straightforward, effortless investing".
With just £1 (NZ$1.97) and 10 minutes to sign up, individuals can begin to invest. They have five options for might-be investors, ranging from "cautious to adventurous" to enable a choice of investment that suits alongside an idea of how long the investment should last, and how much the plan could be worth within that timeframe.
Additional benefits to investors include the ability to opt for an ethical fund that only invests in socially responsible companies as well as the ability to cash out at any time, free of any charges or fees.
US-based unicorn (a privately held start-up company valued at over US$1b) Beyond Meat, a vegan, meat-alternative company went on the stock market in early May and gave investors a return of 160 per cent in just one day.
Now worth around $5.6b, losing money, and not promising when — or if — it ever will return a profit has not discouraged investors who are still happy to invest their cash into longer-term, sustainable and socially responsible companies.
Perhaps proof that what millennials are really investing is their trust, just as much as they are their money.
Millennial facts
25-39 years old now
40% of millennials are not invested in the stock market
3x more likely to apply to a company because of its stance on social and environmental issues of millennial investors believe their investment decisions can influence climate change
84% believe their investments can help reduce poverty
77% of affluent millennials had made some form of impact investment
92% care more about having a positive impact on society than doing well financially.
