With unprecedented access to technology and a fresh perspective on investing, millennials and Gen Z are set to revolutionise the investment landscape, leveraging innovation to build wealth and drive positive societal and environmental change.

It’s been reported that the largest intergenerational wealth transfer in history is underway — with the Baby Boomer generation expected to pass down an estimated $70-90 trillion to their millennial children (those born between 1981-2000), in the US alone. 

Many millennials inheriting this wealth come from affluent families, which could potentially widen the inequality gap. However, there’s hope that the fresh set of values and investment behaviours that this generation will bring may contribute to reducing it.

COVID-19 wiped out years of progress in reducing poverty and caused economic inequality to spike. According to Oxfam, the world’s 10 richest men have doubled their fortunes since the start of the pandemic, while the incomes of 99% of humanity are worse off as a result. The charity estimates more than 160 million people have been pushed into poverty; a situation exacerbated by the war in Ukraine, and the resulting rise in prices for food and energy.

A report by research group World Inequality Lab reveals that global economic inequalities are now as extreme as they were at the peak of Western imperialism in the early 20th century, with Oxfam’s data revealing that the richest 1% of the world’s population owns more than twice as much wealth as the bottom 90%. 

Governments have become significantly poorer over the past 40 years as the private sector has acquired an ever-larger share of total wealth – magnified by heavy government borrowing during the pandemic, according to the World Inequality Lab.

Due to COVID-19, 99% of humanity are worse off than they would have been.

The investments market is expected to burgeon in the next few years. Along with low interest rates in many parts of the world, which have led investors to seek higher returns in riskier assets, the emergence of the millennial investor, alongside fintech developments, is opening up the market in new and exciting ways.

Investing differently

Beyond seeking a financial return, and building personal wealth, the next generation of investors will look to invest in ways that align with their values and passions; such as tech innovation, and environmental and social justice issues. Unlike their predecessors, they’ll be less inclined towards traditional investment vehicles like stocks and bonds, and instead, will be drawn to alternative investments such as cryptocurrencies, real estate crowdfunding, and impact investing. Alternative assets like these offer the potential for higher returns, but importantly align with the values of socially conscious investors.

Impact investing

Millennials and Gen Z are passionate about making a positive impact on the world. They are drawn to companies and funds that prioritise environmental, social, and governance (ESG) criteria, investing in businesses that contribute to a more sustainable future. 

According to experts like Kieron Boyle, CEO of the Impact Investing Institute, interest in impact investing is on the rise, and the sector will continue to offer diverse investment products and opportunities to those who do have funds available to invest.

By directing investment towards initiatives such as affordable housing, renewable energy, education, and healthcare, impact investors can help promote inclusive economic growth and the move towards a more equitable future.

EXPLORE MORE ON IMPACT INVESTING HERE

Many socially conscious investors are interested in supporting small businesses and entrepreneurs, particularly those owned by women, minorities, and individuals from disadvantaged backgrounds. Equally, this next generation of investors is more likely to choose to divest from industries that contribute to economic inequalities and environmental degradation, such as fossil fuels, tobacco, and weapons manufacturing.

The role of Fintech 

Technology sits at the heart of the ‘next gen’ approach to investing. From AI and robo-advisors, to blockchain and mobile trading apps, technology has democratised access to financial markets, making investing more accessible and affordable than ever before. With just a few taps, investors can research, trade, and efficiently manage their portfolios from anywhere in the world.  

Social media is also playing an increasingly prominent role in the investment world. According to a US study, one in three Gen Z individuals are learning their personal finance from TikTok and YouTube, and are five times more likely to make an investment decision based on what they see on social media. 

As Gen Z starts to surpass millennials in earnings in the next decade, teens will become a major force in the investment world. They’ll demand transparency and flexibility in their tech; seek out platforms that offer low fees and personalised advice, and actively pursue socially responsible investment options. Social media and online communities play a crucial role in shaping their investment decisions, allowing them to share insights, seek advice, and collaborate with like-minded investors.

Zeed is a fintech start up that uses short-form videos to break down financial concepts, and is empowering Gen Z investors across Europe with its educational content.

“One of the biggest barriers faced by Gen Z investors is developing the knowledge and confidence to decide what to invest in,” said Zeed’s co-founder and CEO Salman Hussain. “More investors want autonomy over how they invest their money, especially when it comes to themes like ESG and impact investing. Communicating these financial concepts clearly has become even more important.”

With a blend of innovation, technology, and social consciousness, they are redefining the way we invest, creating opportunities for growth, and building a more sustainable and prosperous future for generations to come.

Our new programme for 2024: The Future of Investing

News-style programme The Future of Investing, made in partnership with the London Stock Exchange Group, will bring to life how effective capital allocation can deliver financial security for individuals and businesses; contribute to job creation and innovation, while impacting economic growth.

Alongside insights into value and wealth creation, our programme will explore how the investment community can deliver positive change for society by embracing responsible investment practices.

The programme will feature industry insight from experts at the London Stock Exchange Group, the Impact Investing Institute and the UK Sustainable Investment and Finance Association. The programme will launch at an exclusive in-person panel event at the London Stock Exchange, with a programme showcase.