Millennial investors and disruptive innovation go hand in hand because Millennials have been a disrupted generation more than either Generation X or the Baby Boomers that preceded them.
Born between 1980 and 2005, Millennials are the first digital natives. They came of age with the Internet, tried to find their first jobs during the recession of the early 2000s and then the Great Recession of 2008. Now they are dealing with the on-going effects of a global pandemic. Disruption is something they have always known.
What makes them attractive as investors is that they are the best-educated and most diverse generation in history. They are tech-savvy, thrifty, and their ideals guide their decision-making, even around investments. These factors will all play into how they invest their estimated $2 trillion in assets.
Why Millennials are already disrupting everyday life
A large part of how Millennials are already disrupting traditional economic patterns is due in no small part to frugality. Millennial frugality is based on the high levels of debt and precarious employment opportunities experienced by this generation, given the national and global economic challenges they’ve experienced in the early stages of their careers.
They also work differently in many ways from older generations. Millennials embrace digital and remote work, as well as the gig economy, either out of necessity (because of precarious employment) or because it suits the flexibility and work-life balance that so many Millennials prize. Their generation values experiences, like travel, over traditional material acquisition like cars and luxury items. More than any other group of workers, they will experience (and are best prepared for) the kind of disruptive innovation that is coming to the economy over the next 5 to 10 years.
On average, Millennials earn less, hold fewer assets, and have less wealth than previous generations did at comparable ages. Their lack of participation due to financial constraints is why so often you hear discussions in the media of how Millennials are “killing” traditional industries that cater to ‘big ticket’ purchases like appliances, housing, and automobiles.
Many Millennials face heavy student debt loads, meaning that how Millennials budget and spend is far more thought out and restrained than it might have been with older generations. However, this is not to say that Millennials don’t have money or that they don’t spend it—they do. And they invest it, too. But perhaps more than other generations before them, they spend and invest based on their ethical principles. Millennials are more than willing to pay premium prices for products, services, and investments that match their ethical outlook, which tends (on the whole) to be progressive and socially conscious in orientation.
A full 73% of Millennials will pay more for products or services that are sustainable or which they feel will positively impact society. Millennials are twice as likely as the average investor to prioritize sustainable investments, with 75% believing that ethical investment choices can positively influence macro social and global trends, such as slowing and reversing climate change.
What are Millennial investors looking for?
Millennial interest in ‘responsible’ or ‘ethical’ investments tends to overlap with disruptive investments. For example, Millennial concern for the environment makes green technology, autonomous solutions, and clean power particularly attractive to this investor cohort. With many of these technologies now achieving commercial viability, the scales will begin tipping increasingly in favour of these disruptors and become all the more attractive to the concerned Millennial investor.
More so than Generation X or the Baby Boomers, Millennials are committed to progressive ideals even in investing. Their desire for green energy, socially responsible companies, and disruptive innovation will translate into investment decisions that will shape markets in the medium- and long-term. Given the unprecedented transfer of wealth that is coming—an estimated $30 trillion is set to change hands over the next few decades from Baby Boomers to Gen X and Millennial children—we are about to witness the largest intergenerational wealth transfer in history. With that money in hand, expect Millennial investors to continue choosing investments in service of progressive ethical ideals and drive disruptive innovation through their investment choices.
Connecting Millennials and disruptive innovation
Raised in an era of almost unprecedented technological change, Millennials are not frightened by the prospect of disruptive innovation. They embrace ambiguity and impermanence and are more willing to take chances on innovative and potentially disruptive advancing technologies.
This is the generation, for example, that has embraced eGaming as a new and novel sport. Millennials have helped it grow throughout the pandemic to where eSports in the United States will have more viewers in 2021 than any professional sports league except the NFL. They are investors interested in technologies like cloud computing, 5G, blockchain, genomics, and robotics and automation. And they’re willing to embrace disruptive technologies like bitcoin that can revolutionize digital payments and currency.
More than anything, Millennials are willing to embrace what has always been unique and meaningful to their generation: innovative and disruptive technology.
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