The next generation: Millennials out-invest Gen X and Baby Boomers

Familiarity with technology and a desire for higher returns is driving a preference for online investment platforms among millennials.

Despite doom and gloom reports suggesting millennials and Gen Zers have no money and are resigned to a poor financial future, a new study suggests millennials are actually out-investing Gen X and Baby Boomers.

The ArchOver report, Next Gen: Investors and savers, explores the UK’s attitude towards risk and investment in the current climate. Living in a conservative government that focuses heavily on austerity and saving has clearly had an effect on most UK adults (67 per cent) who consider themselves as savers using deceptively ‘safe’ banking options like savings accounts and pension funds to sit on their cash.

The remaining third (33 per cent) see themselves as investors, using riskier avenues like stocks, shares and property to grow their investments.

However, in a challenging economic environment, there are signs both savers and investors need to broaden their options and embrace alternative forms of finance to secure higher yields.

The common view of millenials is that they lack the foresight to build up a portfolio of savings, investments and pensions and are being driven out of the housing market through lack of opportunities.

Yet this is also a group that is confident in their own financial abilities and acutely aware of the need to make their money work harder. Of the 2,000 people surveyed, 35 per cent of millennials are investing or saving more than £250 per month compared to 26 per cent of Gen X and 25 per cent of Baby Boomers.

“Despite claims that Millennials are stuck in a financial rut, trapped by high property prices and low-wage growth, this is a generation that has grown up in an era of record-low interest rates and recognise the need to secure better returns on their disposable income,” explains Angus Dent, CEO of ArchOver.

“On the other hand, those aged over 35 are at risk of missing out on new avenues offering higher returns. Gen X and Baby Boomers could benefit from following in the footsteps of Millennials and introducing greater diversity into their investment portfolios to seek out higher returns.”

Millennials, who have been early adopters of social media and have a strong familiarity with technology, are using this knowledge to identify new online tools or platforms to invest over. The research reveals that 59 per cent trust technology and use automated services to help generate the best financial decisions. In contrast, just 40 per cent of Gen X and 24 per cent of Baby Boomers claim the same.

As a generation of digital natives who are strongly connected online with access to a wide circle of information, millennials are relying on reference points from their peers. Overall, 41 per cent of 18-35-year-olds get investment advice from their friends, family or colleagues, while older generations are more hesitant to talk about money. Only 31 per cent of Gen X and 19 per cent of those over 55-years-old would turn to their friends or family for advice.

Those aged over 35-years-old are also failing to take advantage of opportunities to diversify their portfolios and experiment with options offering higher returns. Nearly half (44 per cent) of millennials are investing using P2P and 57 per cent are comfortable with alternative forms of investment that hold a higher level of risk. In comparison, just 16 per cent of Gen X are investing using P2P platforms and only 29 per cent are considering new or alternative investments with higher risk levels. For Baby Boomers, these figures sink even lower. Only eight per cent have invested over P2P platforms and just 14 per cent would accept the higher level of risk that comes with new and alternative investments.

“Rather than admonishing millennials for being irresponsible, the older generations could learn something from following the behaviour of a new generation,” concluded Angus Dent.

“Millennials, who grew up during the deepest and longest recession in recent history are proactively looking for ways to balance security and risk in order to maximise returns but without putting their capital in too much danger. In an effort to secure higher yields, they are tackling the difficult financial climate head-on.”

We have entered a new age of investment. Millennials are leading the way in using their digital know-how to experiment with ways of growing their nest-egg and setting the pace. Now it’s up to Gen X and the Baby Boomers to decide if they want to follow their lead.

The research reveals that Millennials see opportunity where older generations see caution. More than half (52 per cent) associate the words ‘risk’ and investment’ with opportunity, while 55 per cent of Gen X associate it with ‘discomfort’ and 58 per cent of Baby Boomers associate it with ‘uncertainty’.

Gen X are too preoccupied with safety to take a new opportunity that could grow their money – 60 per cent would only invest in traditional and proven investments, such as bonds, cash, equity and shares that have benefitted them in the past.

While more than three quarters (76 per cent) of Baby Boomers make investment decisions based on the security provisions in place to protect their investments. However, investment habits need not be generational. If investors can find a comfortable balance between reward and risk then a bolder, more creative and diversified approach can pay dividends.

Owen Gough

Owen Gough

Owen Gough is a reporter for He has a background in small business marketing strategies and is responsible for writing content on subjects ranging from small business finance to technology...

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