Saving and investing are important financial considerations that help you reach your goals in the future. But be sure to keep in mind that all investments come with risks, including the potential loss of principal.
Participants in the Investing For The Future home study course were asked to complete demographic questions, assess the level of the course’s content, and report on knowledge gained and behavioral change since taking the course.
The next generation of investors is socially conscious.
Millennials and Gen Z investors are increasingly interested in putting their money where their hearts are. They’re looking for investments that align with their social, environmental, and governance values. This interest in sustainable investing is expected to grow, given that they’re the largest generations in the workforce and will inherit trillions of dollars.
For example, 25-year-old data consultant Hannah Cohen avoids stocks from companies that don’t have good environmental or societal practices. She’s also not interested in investing in oil or gas companies that contribute to climate change. In fact, according to a recent survey, nearly two-thirds of Gen Z investors say they want to allocate their portfolio in a way that supports causes they care about.
These new investors want to work with financial advisors who share their values. They’re willing to spend more time researching their investment options and expect a personalized approach from their advisors. They’re also more likely to use digital tools, such as short-form videos and social media, to communicate with their advisors.
As the next generation of investors becomes a bigger force in the market, they’ll push companies and investment products to adopt more responsible ESG policies. But, like their predecessors, they’ll face challenges in their quest for the perfect ESG-compliant portfolio. These include a lack of transparency and trust in ESG reporting and concerns about the possibility of “greenwashing.” It’s up to financial providers and regulators to make sure they’re doing all they can to promote ethical investing.
They’re tech-savvy
Young investors have a different set of priorities and values than previous generations. They tend to focus on sustainability, philanthropy, and inclusion in their investing strategies. Understanding these preferences can help advisors better position portfolios for future growth. They also have a greater interest in value-based investing, which may include investments in social or government sectors that align with their ideals.
Millennials are more comfortable using technology to manage their investments, including robo advisors and online retail trading platforms. This trend is fueled by their familiarity with the broader use of artificial intelligence, which can help them find and vet financial information quickly and efficiently. They’re also more likely to own individual stocks, according to research, and they have a higher share of retirement investment accounts than older generations.
These new entrants to the investing world are upending traditional investment industry business models. Many are sourcing investment advice from financial influencers on social media and are more comfortable with the idea of eschewing human interaction in favor of digital solutions.
As such, private banks must rethink their approach to client relationships. They must provide cutting-edge digital platforms with the right mix of personalised guidance and legacy of prestige to win the trust of Gen Z. They want intuitive tools that allow them to make independent decisions but need the comfort of expert advice when needed.
They’re green
Investing for the future is a vital step for families looking to achieve long-term financial goals. Cash savings can erode due to inflation rates, while investments offer a way to preserve wealth and grow it over time. Whether you are saving for retirement, funding your children’s education, buying a home, or starting a small business, investing in the future will help you reach your financial goals.
Sustainable investment strategies aim to generate measurable social and environmental impact alongside financial returns. They may involve applying negative screening to exclude industries or companies with poor ESG performance, focusing on specific sustainability themes such as renewable energy or affordable housing, and selecting investments that target particular ESG criteria like board diversity, transparency, or ethical behavior. They also include integrating ESG factors into investment analysis and decision-making, as well as continually monitoring and evaluating portfolios to ensure they align with sustainable objectives.
Investors are seeking greater disclosure on how companies will protect their long-term value, what strategies they’ll implement to reduce carbon emissions, and how they’ll pivot their business models. They’re concerned about the possibility of “greenwashing,” or companies portraying themselves as environmentally responsible but failing to change their practices. They also want better data, comparable metrics, and a deeper understanding of how businesses can mitigate climate change. They’re also more willing to support carbon-reducing investments if they know they’ll be making a real difference in the world.
They’re millennials
The millennial generation is now over half of the country’s population, according to Census Bureau data. Often referred to as Gen Y, Gen Z, Echo Boomers, Digital Generation, Net Generation or the iGeneration, millennials have grown up during major technological shifts and global events. This generation has a strong mix of resilience and ambition that has affected their behavior, and how they work, save, scroll, spend, and show up in the world.
Despite the pessimistic predictions of some authors, many scholars see this group as a positive force for change. This generation is more diverse, more socially conscious, and has a greater sense of responsibility than previous generations. Moreover, they are comfortable with new technology and enjoy customizing their gadgets, including using wallpapers and ringtones. Similarly, they are accustomed to collaborating through online chat rooms and multi-user games.
In the US, they are 9% more likely to be decision-makers at their workplace, and they are more than twice as likely to own a home as their Baby Boomer counterparts. Moreover, they are also the largest group to graduate college, and many of them are now taking on more leadership roles in business and government.
Investing in the future is important for families to achieve their financial goals. Precious metals can help to protect against the eroding effects of inflation and offer diversification, stability, and potential growth. This is why families should consider exploring investment strategies that align with their long-term financial goals, risk tolerance, and time horizon.