Jun 27, 2016

Surfing the Millennial Wave

If you are an investor who's hoping to ride the next generational wave to prosperity, you will benefit from a long, sober look at the horizon. A sea change is coming, and it’s different from anything we’ve ever seen. The tsunami bearing down on investors today is enormous, and it’s generated by the generation we call the Millennials.


According to the Pew Research Center, this year, Millennials surpassed Baby Boomers as the nation’s largest living generation. Millennials, defined as those ages 18-34 in 2015, now number 75.4 million, overtaking the 74.9 million Baby Boomers (ages 51-69.) The problem is that Millennials don’t follow the same rules as previous generations. It’s time for the marketplace to re-think and re-gear. Here are a few of the facts.

•    Many Millennials come into adulthood with crippling debt in the form of college loans.
•    Many Millennials have difficulty finding jobs in this economy. Therefore, approximately 32 percent within this demographic are now living with their parents; this is where most of them will remain through their 20s.
•    Victims of the shaky economy who are not fully employed rarely find the resources to save the requisite 20 percent down payment, or a bank willing to grant mortgage loans given their high debt-to-income ratio.
•    Millennials have bypassed or postponed many of the usual ‘steps to adulthood,’ putting marriage, families, and home ownership on the back burner.
•    Millennials are apt to rent, lease, or share their living quarters these days in order to enjoy the upscale amenities available in apartment complexes (such as gyms, pools, gaming facilities, theatres, salons, and spas).
•    Thanks to the growing shift to remote employment, many Millennials work from home, making access to the office a condition secondary to recreational access.
•    Millennials who rent enjoy more disposable income thanks to their unencumbered lifestyles. Without property taxes, maintenance, and repair costs to plan for, they are able to travel more and enjoy global exploration, plunging eagerly into new landscapes, foods, and cultures.

The American Dream of home ownership is not entirely off the table for this generation, but it is somewhere vaguely ‘down the road.’ Meanwhile, this next great wave of humanity is upon us already. Like athletes, investors must quickly shift and adapt to what appears to be a whole new game if they intend to stay afloat in Millennial waters.