'Millennials will be key drivers of economy & stock markets in near future'

Viram Shah

Now that advancements in technology have made it simple for Indian investors to invest in the likes of Amazon, Google, and Tesla, there is a wave of Indians that is latching onto this new opportunity.

Leading this wave are the millennials. The data shows it loud and clear.

On our platform, Vested, 60 percent of the account holders are between the age of 24 and 39 i.e. the millennial generation. These individuals are digital-first, have global aspirations, and want to invest in the brands and ideas they believe in.

This phenomenon is not just limited to India, even in the US, millennials are driving volumes in the local markets. Both Robinhood and Charles Schwab (leading brokers in the US) recently talked about an increase in buying levels from millennials that have been forced to work from home due to the lockdown.

Not only are they buying more, but they are also making bets on industries impacted by the pandemic. Data from the US brokers have shown an increased interest among millennials in buying shares of airlines, videoconferencing, and streaming media companies as well as biotechs.

One of the key reasons for the increased stock market participation of millennials is the ubiquitous availability of information in today’s age. Young investors are now able to research and learn about the stock markets online.

They can follow their favourite investors, learn from their strategies, and formulate their own views. A lot of the knowledge sources related to investing (such as Warren Buffet’s letters or Charlie Munger’s investment strategies) are linked to the US markets and this naturally makes millennials want to invest in the US markets since they are familiar with a lot of the companies listed there.

When given a choice between stocks and ETFs, millennials are preferring to invest directly into stocks instead of investing in index or sector-based ETFs.

The sense of ownership in owning an Apple stock and the brand-affinity for global brands such as Starbucks or Nike drives millennials towards direct ownership of these companies versus say investing in the S&P 500.

As the overall wealth of millennials increases over the next couple of decades, they will become key drivers of not only the economy but also of the stock markets.

It is encouraging to see that these millennials are already thinking global in terms of their investments and are ensuring that their portfolios are geographically diversified by investing in the US markets.

(The author is CEO and Co-Founder, Vested Finance)

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