The millennial generation, the 18 – 30 year olds, is the largest cohort to “come into its own” ever. Larger by far than the Baby Boomers who changed the world with their “flower power,” civic engagement and institutional and more redefinitions, millennials are the first generation of the 21st Century. And what a century the twenty first has already been…a Middle Eastern war almost as old as the century itself, recurrent natural disasters such as Katrina, international attacks on American soil, terrorism, exploding technologies, an “unreliable” economy, uncertainties that permeate every aspect of daily living.
So, How are millennials navigating this 21st Century? Mostly by believing in their own abilities to improvise, their own abilities to create connections, their own abilities to create value, trust, meaning and their own resiliency to deal with failure, risk, change. Millennials, rather than just being branded narcissistic from birth, may, according to research done by the Brookings Institute, the Pew Charitable Trust and others, be the most can-do, optimistic and skeptical generation to come along since our country’s pioneers. Why? Because when everything can and does change in a flash without warning, perhaps the only two feet to stand on are one’s own.
How do real estate and investment professionals adapt their strategies when it comes to working with and presenting options to millennials? It might be well to keep in mind these considerations:
- Millennials have always experienced an economy that has either been in recession or in recovery. The result? Millennials are always waiting for the next shoe to drop. Whatever longterm investments they may even allow themselves to ponder (houses/stocks/bonds/etc.) are thought to be luxuries. Cash and savings are the top two financial priorities for millennials.
- Flat incomes without natural wage increases are all that millennials have known. Millennials think that the only way to acquire more wealth is to acquire more qualifications so they can transport themselves to a higher rung on the income ladder. More qualifications in order to generate more income may include moving on to a new job and a new place. Moving on often translates into being flexible…renting instead of buying.
- Inflation and investment tend to go hand in hand. Without any real inflation, all that millennials have known, millennials haven’t yet been faced with the sting of reduced buying power. Perhaps, if and when inflation becomes a reality, millennials will be motivated to invest.
- Millennials live in a world where overseas events affect U.S. markets, all the time. What happens in Greece or Great Britain or China really does affect what happens here. This interconnected and often chaotic world makes all of us feel as if we’ve no control, millennials particularly. This feeling of having no control makes millennials even more cautious.
- Due to student debt, extended education, and underemployment in the aftermath of the recession, millennials are taking longer, often into their mid 30’s, to make commitments to marriage, children, home buying, etc. It used to be that young people in their 20’s made such commitments, but not today.
Here are some talking points real estate and investment professionals may want to include when discussing investment opportunities with millennials.
a. Inflation may be making a comeback.
b. Risk tolerance is not the same for everyone…it’s subjective. No one wants to hear about risk until they’re ready. And risk tolerance changes, it does not stay the same. The more information, research, and experience someone has, the more that person will be able to “digest” information about deliberate, long view investment instruments such as retirement accounts and houses.
c. Remind millennials that markets are both volatile and resilient. It may seem like markets are either/or. They’re not.
d. Financial planning at any age is always a good idea. Financial planning helps ensure that all of us, regardless of age, can be in the best possible position to accomplish both our short and long term goals.