Stock investing: A brief guide
Millennials have always played a great part in the stock investment game. After the start of Covid-19, many people lost their jobs and this made them look for multiple sources of income to sustain their livelihoods. This gave rise to the popularity of stock investing and people are taking notice.
Ideology and technology have changed the way we all look into our finances. Millennials are leveraging this and opting for more self-directed and thematic investments. Today, many millennials are also choosing alternative investments, including digital assets such as bitcoin, while focusing on social and environmentally charged causes. This mindset could be beneficial to all types of investors.
How are millennials changing stock investing?
Millennials are changing stock investing in the following ways.
Being cautious about where to spend
- Being cautious about stock investing would prompt us to analyze a company's growth rate and customer needs. Like many millennials, when investing in stocks, you should consider factors such as how your company of interest is helping the economy grow. Ensure to be more cautious, do your research well, and only then consider investing.
Sticking to fewer investments
- Some people tend to invest short-term to make a quick buck, but not everyone loses in this gamble. As mentioned before, if you stick to fewer but long-term investments, do your research well, and stay updated about the company's performances and what affects the stock prices, you would be able to secure your investment. Do not invest in something because of its popularity or peer pressure; select a company and field that you are aware of as you would be better able to analyze the companies in it.
- One of the biggest threats to traditional banks and brokerages is that they do not pivot towards a fast-growing digital asset industry. Millennials noticed these decentralized finances and unethical practices in the mortgage sector, especially around the financial crisis of 2008. This gave rise to Bitcoin (cryptocurrency) whose valuation in current times is around $50,000.
- Invest in a company where you can see its past growth rate and future potential. Especially after the pandemic situation, it is essential for a company to be in the digital space. Millennials have invested in the same way. They tend to consider companies and their performances for almost 20 years in the future. However, these tips would be long-term investors and not day traders.
Zero commission trades
- Warren Buffet advises people to avoid paying commissions as much as possible due to their expensive compounding effect. Zero commission trades are extremely valuable for the long term. This is one of the ways in which millennials are changing stock investing.
Avoid socially-irresponsible companies
- Millennials are considering investing in the stocks of socially responsible companies that can help make a change in the world. One popular example of such a company is Amazon.
- Micro investing is being promoted by millennials as, for most, profitable stock investing is equal to micro-investing. The risk, however, lies in staying updated about all factors related to the company you intend to invest in.
- Fractional ownership is important only if you intend to invest your time and money in a company's growth.
Millennials often choose to invest in the stock market mainly in tech-forward companies. These changes would help improve the consumer journey across the world as well as make the overall economy more inclusive and efficient.
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Frequently asked questions
1. Are millennials investing in the stock market?
- Yes. Around 66% of millennial investors aged between 18 and 40 own stocks, making it the most common type of investment.
2. Are more millennials investing today?
- The availability of social media tools is making it easier and more comfortable for this age group to learn and invest. A survey from BlackRock found that around 45% of millennials are more interested in investing in the stock market today.
3. Where should millennials invest their money?
- Millennials, today, can invest their money in index funds and individual stocks. However, they should do their research well before considering investing in a stock.
4. Which stocks do millennials buy?
- Some popular stocks that millennials buy include Tesla (TSLA), Apple (AAPL), Boeing Co. (BA), Advanced Micro Devices (AMD), Microsoft Corp. (MSFT), Facebook (FB), Amazon.com (AMZN), and Nio (NIO).
5. Do millennials trust financial advisors?
- Yes, many still trust and hire financial advisors when investing. Those who consider themselves knowledgeable about investing are more than 2 times as likely to have a financial advisor as compared to those who are not.