Generational differences of investing

Posted By Darren Winters on Jul 27, 2019

Generational differences of investing

The generational differences of investing are likely to be the most marked, bearing in mind that this is the most educated generation ever and most indebted to the tune of $1.6tn.

How people think about investing will depend on where they are in life’s journey. So boomers approaching the end of their working life will focus on investing for retirement. On the other end of the spectrum, Gen Zers will thinking about education and careers and will tend to invest accordingly. 

The generational differences of investing tend to vary across various age groups with different objectives.

Other factors, such as major world events, the economic cycles and culture can also have an impact on the generational differences of investing. 

The latest data from Raconteur sheds light on the generational differences of investing. 

For example, the investment outlook, which influences how people invest, various significant when asking different generations. 

The majority of millennials (66%) are confident about investment opportunities in the next 12 months. But this drops down to 49% when boomers are asked the same question. Put simply youth and optimism walk hand in hand starry-eyed. 

The generational differences in investing are also visible in the context of volatility

Generational differences of investing

Different age groups reacted differently to recent bouts of volatility in the market.

For example, 82% of millennials made changes to their portfolios, 69% of Gen X made changes and 47% of boomers made changes. The Silent Generation made the least changes 32%, this generation is defined as people born between 1925 and 1945. The children who grew up during this time worked very hard and kept quiet. It was commonly understood that children should be seen and not heard. 

In short, as people age they become less impulsive, they react less to volatility, according to the data. 

The digital age, AI investing apps is also widening the generational differences in investing

The majority of millennials (66%) saw the ability to manage all aspects of personal finance, including investments, in the same app as being important. Only 35% of boomers agreed. The younger generations are more accepting of new technologies.

Recommendations made by artificial intelligence is viewed by 67% of millennials as being a basic part of any investment platform. However, Gen Xers and Baby Boomers were more hesitant, with only 30% seeing computer-generated recommendations as being an integral part of investing. 

Environmental, social, and governance (ESG) considerations are another area where generational differences in investing exist

Millennials are twice as interested in ESG investing, compared to their boomer counterparts. The majority of millennials (66%) choose funds according to ESG considerations. 

Millennials also have more of a know it all mentality with 42% considering themselves as an expert in the field. On the same question, only 23% of boomers could say the same. 

But perhaps the greatest generational differences of investing is that this up-and-coming generation is so saddled with massive debts, which is made worse in a tight labor market, that millennials propensity to save and invest is limited compared with previous generations. 

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