On Millennials, Social Responsibility and Investing

Tina Hay  |

Millennials are interested in starting and running their own businesses. Whether it’s within the next few years or later on in life, startup culture has becoming more and more appealing. Resources for how to fund a new company or raise money for a new venture are very popular.

Many young adults are trying to find the quickest and easiest way to make as much money as possible. This is also why freelance positions and side hustles are becoming so much more widespread among this demographic.

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Increasing Sense of Social Responsibility

Millennials truly want a better financial future for themselves as part of a better world at large. When millennials get paid, they like earning those dollars through positive social contribution. The same is true when they spend money – they would like it going to the most deserving businesses, the ones going the distance for causes such as sustainability, conservation and social welfare. However, for all the idealism surrounding where money comes from and where it should go, many millennials struggle with basic financial skills such as budgeting and saving (both link to Napkins), building credit (credit Napkin), not to mention investing (Napkin).

Increasing Commitment to Personal Responsibility

Many millennials leave high school and even college without any academic insight into personal finance or investing.

As a result, they may know about Apple (AAPL) stock hitting new highs but have no idea how to buy and sell shares, let alone do so responsibly. They take out college loans, but might not understand the long-term financial implications of taking on debt. Additionally, many millennials have so many other, perhaps more exciting aspects of life to pay attention to that prioritizing learning about personal finance is not likely.

Increasing Availability of Technology in Aiding Personal Finance

You don’t need to be a math or finance genius to know how to invest and potentially profit from the stock market. Learning concepts of various financial instruments and accounts is essential, and it's not hard to do. For instance, you can begin by auditing your own financial health by creating a budget, maximizing your savings and seeing how much you might be able to set aside to potentially invest. From there, you can learn about investments and securities such as ETFs, mutual funds and the stock market as a whole.

Lack of Knowledge About Retirement Planning

Millennials are not aware of Roth IRA accounts or other retirement options. Many young adults are interested in knowing how they can invest in the latest tech companies.

Credit is a Big Issue Among Millennials

Few understand the importance of building credit at this point in their lives, and do not understand the importance of having a good credit score.

Napkin Finance offers information on funding a startup, the stock market, Roth IRAs, saving money for college and even credit.

Millennials are Skeptical of Financial Institutions

Millennials witnessed what the market crash did to their parents' savings. In an article by Main Street, they claim that roughly 60% of millennial investors ask to be educated on the basics of investing from their financial advisors. From this we can see that millennials would be attracted to a crash course in how to invest responsibly. Millennials are more inclined to invest in newer companies, but also are not afraid to invest in technology companies either. Specifically, Tesla (TSLA) and Alibaba (BABA) are very popular among millennials, while outside the top 30 stocks for people aged 35 and over. Millennials seem to invest their money in things they actually use and are excited about, as opposed to investing a lot in bonds. Millennials seem to be more interested in stocks with high growth expected, as opposed to a steady stream of dividends.

From most of my research, I have found there are generally two types of millennial investors: young people who are highly skeptical of the stock market and prefer to keep their money in cash, or investors who are risk-averse, investing in things they have seen become successful - and they feel more comfortable with because they know about the company. They would rather feel a connection to a company than look at expected returns and decide between companies they don’t know. They buy what they know, which is technology. Oddly enough, millennials who do invest have a diversified portfolio because of their skepticism.

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(Photo by Gphgrd01)

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