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Why Millennials Are Opting To Invest In Cryptocurrency

16 May 2020 | 1 comments | Posted by Che Kohler in Money Talks

Millennials prefer crypto

The world of finance is rapidly changing as we move into the new decade with the worlds largest generation, the baby boomers now steadily moving towards retirement. The Millenials are taking over as the key economic drivers in the workforce as they continue to age and move from entry-level positions to more established roles. Couple with this the fact that technology as changes the way we do business and transact online, and you have the recipe for a seismic shift in capital allocation.

Millennials are have had a tough ride financially as they are seen as the most impoverished generation when compared to previous generations. While we have a better standard of living overall, the majority of wealth sits in the hands of generation X and baby boomers. This slow transfer of wealth has seen Millenials change their buying behaviour and put off commitments like having kids or buying a home.

Due to price inflation and wages are flat for this generation, it's hard to keep up with rising asset prices which is a function of inflation. So what options do Millenials have when they invest and why are they shying away from the old guard of investment vehicles?

1. Real estate

Real estate has been notorious for being the grudge purchase for Millenials with this generation struggling to secure a home. They are priced out of the market, with limited access to capital, and the need to be in city centres to get access to the best-paying jobs has seen the value of real estate skyrocket. While some Millenials may receive a home as an inheritance or receive help from family to finance their home, many are left out in the cold and cannot afford to invest in this market.

2. Savings

The days of banks applying the 3-6-3 rule are at an end. The 3-6-3 rule was to lend at 6%, offer 3% interest and be on the golf course at 3 pm. It was how banks built their customer bases and encouraging savings, but as years have gone by, we've seen a focus on driving up debt and consumer spending and keeping interest rates artificially low. These low-interest rates also discourage savings as you struggle to keep up with inflation and this is the reason many Millenials do not have savings or are actively looking to store their wealth somewhere else for a higher yield.

3. Stocks

Stocks are petty popular among Millenials as applications like Robinhood has made it easier to invest in some of the worlds top companies. Instead of having to work through a stockbroker, Millenials can leverage trading platforms to get quick access to stocks for both short and long term trades. Shares have performed well during the economic expansion, and with several high profile tech IPO's over the years, it has brought significant attention to the sector as an investment opportunity for millennials retail investors.

4. Bonds

Bonds are more of a safety asset, where you look to get a consistent small yield over time, and while it's smart to buy bonds as a long term holder, they are surprisingly not very popular with Millenials. As part of balanced portfolio bonds along with precious metals can provide you with a floor but as Millenials seem to feel that at their age they're willing to adopt as much risk as possible for yield, perhaps bond s have not been seen as the best place to put your money.

5. Precious metals

Precious metals such as bullion or coin collecting were popular with previous generations but not so with Millenials as an addition to their portfolio. As precious metals are a risk-off asset, they protect you against economic contraction but since we've been in the boom time and the longest economic expansion in history, very few Millenials thought to store a portion of their wealth in gold or silver. As we see, economies start to contract due to several reasons such as health and financial we may see more Millenials move into precious metals if only to provide a floor for their portfolio.

6. Cryptocurrency

Previous generations see crypto as a bubble and a speculative asset, but to Millenials who have grown up with technology they see it as the investment vehicle of the future and key to opening up a new decentralised economy with a host of new efficiencies. The popularity amount this generation is palpable with around 40% of Millennials looking to invest in cryptocurrency as the economy begins to contract, and they look for safe-haven assets to store their purchasing power.

Millenials money is new money

The distrust of the current economic system coupled with the search for the best yield on capital will see more millennials moving into the blockchain and the De-Fi space. These emerging technologies are attractive for millennial investors. They are looking to get value for their stored purchasing power, protect against politics and government failure and move away from centrally planned economies.

Blockchain driven by Bitcoin is here to stay, and we're seeing the birth of a brand new asset class inspired by the Millennials need to reboot the economy and provide alternatives in the free market.

As a millennial, have you invested in cryptocurrency? What do you think about traditional finance? How have you spread your investment risk? Let us know in the comments section down below.

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Recommended reading

If you enjoyed this post and have a little extra time to dive deeper down the rabbit hole, why not check out the following posts on cryptocurrency and blockchain.

Disclaimer: This article should not be taken as, and is not intended to provide any investment advice and is for educational purposes only. As of the time posting the writers may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency as all investments contain risk.

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