Millennials’ Values Are Shaping How They Shop and Invest

Millennials are considered to be great at saving money—with one survey estimating that 39 percent of them have been tucking away more than 10 percent of their salary. But they’ve been reluctant to invest it, with a 2018 study finding that 66 percent of people between 18 and 29 (and 65 percent of those 30 to 39) consider investing in the stock market “scary” or “intimidating.”

That may be changing, and the lure may well be impact investing—the opportunity to invest hard-earned savings into social and environment causes.

As TriplePundit reported last November, a study from Swell Investing found the vast majority of Gen Z (84 percent) and millennials (78 percent)are engaged in socially responsible or impact investing, or plan to invest that way in the future. Similarly, a First State Investments survey found that more than 80 percent of millennials are interested or very interested in sustainable or responsible investing.

That is a stance that resonates with Erin Lowry, author of Broke Millennial Takes On Investing: A Beginner’s Guide to Leveling Up Your Money. “I don’t like to shop at places that don’t align with my ethical and philosophical values, so why would I invest my money what way?” she asked TriplePundit.

The boycott generation

Fear of the stock market does not translate to fear at the cash register (or the online shopping portal). In 2018, 35 percent of Generation X and 33 percent of millennials participated in the boycott of a company or product they had spent money on in the past, according to a report last month from consumer research firm Comparecards.com.

That willingness to toss a product to the curb is often driven by values, with 60 percent of millennials willing to spend more on brands that are sustainable, according to the State of Fashion 2018 report by Business of Fashion (BoF) and McKinsey.

Now millennial interest in their money is turning to investments. Lowry, who has developed a following as the “Broke Millennial” providing financial advice to millennials, found that her peers were “overwhelmed” by other investing books on the market and decided to write her own.  

“It is very much a beginner’s guide. You don’t need the language to start learning and understanding about investing,” she said.

A fear that it could all collapse

“A lot of millennials are a little hesitant to get into investing in the first place,” she said. And while she is aware of surveys such as the one from Swell Investing about her generation’s enthusiasm for impact investing, “I’m not sure if that is the truth or wishful thinking on the part of survey participants.”

That reluctance, she said, is born out of the Great Recession of 2008, when many millennials, just graduating college or having recently entered the workforce, “suddenly felt a lot of mistrust in the stock markets. What we understood at a young age was that it could all collapse.”

Now, ten years later, millennials may have more income to invest, but Lowry said her peers are also struggling to pay student loans, with the cost of living in expensive cities and are perhaps delaying marriage, or the purchase of a home.

“Yet I know we can do this. We can learn how to mitigate our risk and make money while also doing some good in the world if you choose impact investing,” Lowry said. “I’m very bullish about the millennial generation and where the future is going to go. It’s taken us a little longer but we’re getting there.”

Making your voice heard

Lowry said she invested in her first index fund in 2012. The funds in which she invests are ESG (environmental, social and environmental) or SRI-compliant, she said, but she chooses not to exclusively dedicate her investments to impact investing. “I think it’s about finding a healthy balance and it’s important to be diversified,” she explained.

Managers of SRI funds also have to do a better job to impress millennials, Paulina Skypala wrote in the Financial Times. “Investing in funds with one of these labels may ease the conscience but, on the evidence available, it won’t slow climate change, improve biodiversity or take plastic out of the oceans. There is also no guarantee that managers who offer sustainable funds will push investee companies to make the changes that could lead to such outcomes, or use their shareholder vote against company management.”

Lowry argues that millennials can make their voices heard as investors, much as they do as activists.

“If you are a client with a particular brokerage and you have an issue with a company in a fund, make your voice heard,” Lowry told TriplePundit. “There is power in numbers and you are not without power.”

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