Unsurprisingly, there is coinciding in the current generational crop coming into an investing age, and the emergence of a new type of investable asset – cryptocurrency. For most of the 20th century, and well into the 21st, stocks have been the primary choice to invest money in, however, that is changing.
Stocks have not only lost their luster with Millennials, who are expected to be the driving investment force in the next decade, but they are also facing competition in the form of cryptocurrencies. These new digital assets were born out of the same discontent felt by the generation that witnessed the 2008 banking collapse and have been created to appeal to the Millennial lifestyle.
Research and reports have shown that millennials are less likely than any other age group to own stocks and conversely, they are the generation that finds cryptocurrencies most appealing. In fact, it is not only stocks that are falling out of favour, from gold to commodities, the draw to this younger generation is fading fast.
It is this discontent feeling from Millennials that is shining a spotlight on Wall Street and the 1 percent that controls so much of the global wealth. Millennials are far less individualistic and are far more interested in social consciousness.
A survey from Bankrate has found that only 23 percent of those aged 18 to 37, responded that the stock market is their preferred place to put money they won’t need for ten or more years.
At the same time, older generations have expressed a preference toward investing in stocks over other methods of saving, such as cash, real estate or even Bitcoin. 33 percent of Gen X and 38 percent of baby boomers said they prefer investing in stocks.
This information is nothing new nor surprising, but one of the reasons for the breaking of tradition from up and coming generation is how the stock market has not performed for them.
Millennials have not fared so well with stocks. For millennials born January 1980, the stock market (S&P500) yields factoring in dividends produced flat returns for the 12-year period from age 18 to 30. When looking at someone born in 1970 in comparison the picture is substantially different, as they would have seen $1 turn into more than $5 during from age 18 to 30. Of course younger millennials – those born in 1990 could have been fortunate enough to get into the stock market at deeply discounted valuations after the 2008 recession. However, mega bailouts, exorbitant CEO pay, affordability of real estate and the massive occupy wall street protests have created instilled a deep distrust of financial markets among younger generations.
Clearly, there is little reason for millennials to be investing in something that has not performed for them or doesn’t reflect there socially conscious views. Consequently, they have started looking elsewhere, and they have managed to find something more attractive.
According to a report from Edelman, affluent millennials are looking to invest in cryptocurrency. 25 percent of affluent millennials reportedly are using or holding cryptocurrency and 31 percent are interested in using cryptocurrency. More importantly, 74% said that innovative technologies such as blockchain make the financial system more secure, indicating their interest in overhauling the current status-quo.
Another way to understand the drive towards cryptocurrency for Millennials is to look at their preference to digital assets Gold, a traditionally stable asset used to manage risk.
Gold has long been a trusted, safe, and less volatile investable commodity, however, it is highly out of favor with millennials. Nate Geraci, president of the ETF Store, an independent investment advisor, stated:
“When we talk to our younger clients – we have a core gold allocation in our portfolios, and they’ll ask about that and say, ‘what about crypto?’ And if you talk to, primarily millennials, and ask them which they prefer, Bitcoin or Gold, it is a landslide. It is not even close; it’s like 90 percent prefer Bitcoin.”
A 2019 survey from Bankrate indicated that 9% of millennials selected cryptocurrency as the preferred long-term investment, further confirming demand for virtual currencies is growing among the millennial demographic.
Millennials are fed up with the financial legacy that has been left behind for them; they have seen the 1 percent continuing to enrich themselves while making financial freedom more unattainable for the younger generation.
Movements like Occupy Wall Street are clear signs of dissatisfaction and frustration with the financial system among Millennials, who led the protests against social and economic inequality, greed, corruption and the undue influence of corporations on government.
The new generations have reached a point where they are no longer happy to continue under the heel of an oppressive system and they have reached breaking point at a time where a new financial system is gaining notoriety, legitimacy, and normality. Thus, it is understandable why millennials are flocking towards a decentralized system using cryptocurrency and away from traditional investments.
References:
This is a repost of the Article written by Aly Madhavji and Danish Chaudhry featured in the Corporate Investment Times Magazine for the October 2019 edition: https://corporateinvestmenttimes.com/CIT18/Corporate-Investment-Times-October-2019.pdf
#crypto, #millennials, #investing
Managing Partner
Blockchain Founders Fund
Aly Madhavji is the Managing Partner at Blockchain Founders Fund, Senior Investment Advisor to BitBlock Capital and Fiat Capital Fund, and a Co-Founder and the Former CEO of a digital currency exchange. He is also an avid investor in early stage companies.
Managing Director
Bitcoin.com Exchange
Danish Chaudhry is the Chief Operations Officer of the Bitcoin.com Exchange, overseeing all operations, growth and strategy of the platform. His background is in financial services, where he was at the worlds largest asset manager, Blackrock Inc, for a number of years. He then went to found and successfully exited a payment platform in the fintech space.
