Millennials Prefer to Turn on the Risk When It Comes to Investing

If today’s retail investing environment were a drama series, it wouldn’t be called “The Young and the Risk-less.” Millennials and Generation Z investors are anything but risk-averse according to an E*Trade survey.

“Millennial and Gen Z investors are willing to stomach far more risk than they have in the past, according to fresh data from E*Trade,” a Yahoo! Finance article noted. “The company’s quarterly investors survey found that over half of these younger investors indicated that their risk tolerance has increased since coronavirus, far higher than other groups.”

“E*Trade’s survey, which polled 873 investors, found that 51% of young investors have increased risk tolerance — 23 percentage points higher than the total population,” the article added. “Furthermore, this cohort is getting out of cash, trading more, and full of optimism where the market is concerned. Around 34% of investors under age 34 have moved out of cash and into the market, which is 15 percentage points higher than the total population.”

Savvy ETF investors sensing an opportunity could consider the Global X Millennials Thematic ETF (MILN). MILN seeks to provide investment results that correspond generally to the price and yield performance of the Indxx Millennials Thematic Index.

In the case of MILN, the underlying index is designed to measure the performance of U.S. listed companies that provide exposure to the millennial generation, (collectively, “Millennial Companies”), as defined by the index provider. The millennial generation refers to the demographic in the U.S. with birth years ranging from 1980 to 2000.

MILN Chart

MILN data by YCharts

Ever the Optimists

As the survey alluded to, millennials have a healthy optimism when it comes to the capital markets. While “healthy” is certainly debatable depending on who you ask, the 10 to 37-year-old age bracket is expecting the highest return on their investments over the next five years.

“Even with the economic downturn caused by the coronavirus pandemic, millennials are still the most optimistic of any age group about the investment returns they expect in the coming years, a survey has found,” a CNBC report stated. “Millennials anticipate an annual total return of nearly 12% on average from their entire investment portfolio over the next five years.”

The data came amid the market panic and uncertainty caused by Covid-19. As such, millennials remained optimistic about the stock market’s prospects moving forward despite any negative ramifications the pandemic poses.

“This was the finding of Schroders’ 2020 global investor study, an online survey which it commissioned, polling 23,450 investors around the world between April and June,” the CNBC report added. “It categorized millennials as those aged 18 to 37-years-old.”

One notable found in the data was the older the age group, the less optimistic they were. Given the data, it’s difficult to dispel the myth of a grump, old investor.

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