The Future of Investments

As members of the Millennial generation start to outnumber Baby Boomers, the needs of investors are changing. The investment industry is forced to adapt in order to remain relevant to the younger generation. Young workers today are the first cohort to grow up using smart phones and the Internet. They use social media and do-it-yourself technology to invest in ideas as opposed to assets. As the financial industry tries to adapt, major changes are coming. Read on to find out more.

History

Investing used to involve seeing an investment advisor. The advisor gains an understanding of the client’s needs and preferences and then takes her money and invests it in stocks and bonds. The client trusts the expertise of the advisor without getting involved in the process. A monthly statement is usually the extent of the client’s knowledge of her investments. Unfortunately, this process has been criticized for conflicts of interest, excessive fees, and advisors who are salespeople as opposed to veritable experts in their field. With the new generation of investors, all that is changing.

Crowdfunding Gaining Popularity

Today’s generation prefers to invest in ideas and feelings as opposed to assets. They aren’t likely to trust their money with a financial advisor, although they will trust their gut when it comes to causes and projects that move them. Crowdfunding is one particular type of investing that has increased in popularity in recent years and will continue to remain popular with twenty- and thirty-somethings. Companies like Indiegogo and Kickstarter give anyone the ability to invest their money. This concept also helps entrepreneurs who might not normally receive funding from financial institutions. With $2.7 billion in profit in 2012 alone and 80% growth between 2011 and 2012, this is an industry to watch.

Emotional Investments

The traditional investment model is likely to change in accordance with the practices of the Millennial generation. Motif Investing is a brand new concept that is gaining popularity with young investors and will continue to in the years to come. It enables customers to create and share investment portfolios that reflect their interests and values. Investors pay just under $10 to purchase a motif portfolio comprising up to 30 stocks that can be preselected according to a theme or chosen by the individual. Motif themes correspond to the beliefs or worldview of the individual. For instance, those who are passionate about the environment can invest in eco-friendly companies.

The Future of Investing

Crowdfunding is changing the very nature of investing. The new generation is no longer willing to dump their money into banks and mutual funds; instead, they want to feel like their money is helping society to progress and evolve in a positive way. The future of investing involves new models for creating an investment portfolio.

Quick Wrap-Up

The investment industry is changing rapidly as the Millennial generation enters the workforce. Millennials are more likely to invest in causes as opposed to assets. They already use crowdfunding to help get projects off the ground and support the causes they believe in and will continue to do so in the future.