Financial Opportunities for Millennials and how to exploit them

Last time out I looked at some of the financial challenges Millennials face. Whilst there are lots of big challenges standing in the way of Millennials; there are also great opportunities. If my last post was sanguine, I hope that this one is optimistic.

Let’s have a look at five opportunities that Millennials can exploit to help them achieve their financial goals.

1. Knowledge

In the space of fewer than three decades, we’ve been able to compile the complete knowledge of human knowledge on the internet. That knowledge is free, easy to access and readily available. With a smartphone, you can access it anywhere in the world, from Siberia to Syndey. It’s remarkable. And an unprecedented point in human history. Like never before, we can avoid so many mistakes and costly lessons. We can learn new skills and take advantage of new opportunities. For those willing to learn and put the brain matter to work, we can learn how to successfully save, invest and plan our future. That’s a huge opportunity.

2. Protection

In my challenges post, I talked about how the Government can’t take all your money anymore (at least in Western Democracies). But more than that, savers and investors are protected like never before. Governments have set up regulatory bodies which actively police against mal-intentions. The days of Robert Maxwell and Equitable Life are long past. That’s not to say we can’t do better. There are still lots of regulatory issues out there: you need only look at the Port Talbot British Steel fiasco. But things are so much better than they were.

For Millennials, it requires us to put some trust and faith in ‘the system’ that is sorely lacking amongst older generations who have been burnt. I’m not imploring blissful ignorance of the shortcomings in the financial sector. A wary trust that investing early in a diversified investment portfolio is the best way to provide for our financial future.

3. Accessibility of financial services

Perhaps even more important than investor protection is the increasing accessibility of financial services. Not long ago investing in the market meant ringing up a stockbroker to place a deal or going to see an adviser in person to buy a product. The internet has washed all that away. It’s easier than ever to set up a brokerage account and get started. You can start investing in the market from only £10 a month.

There is also so much readily available information out there. Sites like Monevator and Candid Money have led the way in making almost every aspect of investing available for the layperson. If you invest in a product you can transparently find information on: exactly how the product works; what the aim of it is; and how much it costs.

Again, things aren’t perfect. Investors deserve greater transparency (thankfully we have some great people on our side such as The Transparency Task Force and the Evidence-Based Investing Conferences). But the days of people being locked out of the market are gone. Anybody can, and should, start investing for the future today.

4. Flexibility of opportunities

A comment on the challenges post beautifully captured this opportunity (thank you Roberto Sans):

Another thing widely available now and near impossible a generation ago was the fantastic geographic mobility that we enjoy today. I you have marketable skills in a country different from your own you can just move and work there for a while but you do not have to lose all contact with your friends and family. You can be in touch by social media, Voip telephony and cheap flights.

Whilst in some respects it is lamentable that the old ‘job for life’ or ‘company man’ has faded into extinction, it’s never been easier to move jobs, careers and countries. Prior to WWI the merchant and aristocracy of the world moved freely around the world picking up the best opportunities. Skilled tradesmen would often be prevented from leaving their own towns and cities.

The horror of WWI and mutual distrust between countries led to the creation of the modern passport, preventing the movement of people and skills. Since that point 100 years ago it has become easier and easier to move to find new opportunities. An example is how I, sitting in London, can communicate to people all over the world (and vice versa).

So for Millennials, the relaxation of physical constraints in where and how they work presents many opportunities. My advice to Millennials would be to look out for those opportunities, and jump at them when you get the chance.

5. People

I’m no Cassandra when it comes to social media, but there is a great aspect to it. Like never before I can talk and listen to a range of viewpoints that were previously unavailable. I can find immediate insight from leading experts in investing, pensions and saving through Twitter. We can keep in contact with people from around the world with social media and VOIP.

Perhaps more than that, I can speak to and learn from my Italian, Malaysian Chinese and Albanian neighbours. I can learn from their cultures and experiences in other countries. What aspects of life are better here (or worse). Or simply thinking about life from a viewpoint other than my own. Because when you work, you’re clients and customers are going to be different to you; and the more open you are to understanding what makes them happy, the easier your job will be.

Over to you

What opportunities do you think are available to Millenials? Do you agree with the opportunities I’ve written about? Or do you think I’m overly optimistic? If you had to give some advice to a Millennial, what would it be?

 

All the best,

Young FI Guy

[p.s. thank you to all those that read and commented on challenges post. I felt quite down about it after struggling to write it and feeling unhappy with the quality of my writing. Thank you all for giving me the encouragement to keep going!]

Comments

  1. Nice post – A few thoughts….

    The internet – Yes, the majority of humanities truths are there, but so is the falsehoods too.

    In terms of financial opportunities, when have we as “retail” investors been able to short the S&P and things like oil? Forex and futures trading using web based trading systems and very little starting capital was certainly not available for the 20-something baby boomers or Gen Xers…

    1. Thanks Quitting Teaching.

      Shorting for retail investors is a difficult subject, and I don’t have any good answers. It would be nice for retail investors to be able to take short positions. But from the market review by the FCA most CFD customers lose money (whilst a tiny minority make out like bandits). The difficulty with shorting is you can be absolutely right with your positions and still lose all your money due to margin calls (of dollars and data had an excellent post on this: ).

      One thing for sure is that the proliferation of ETFs means that most investors can short things such as the S&P and commodities. Whether that’s good or not, I’m not sure the people who bought XIV would agree!

      (By the way, apologies if I’m misunderstanding what you are saying with shorting.)

      1. No you are not and I would not recommend it as a “long term passive investment”. My point was that the very fact that it is possible that we as retail investors could money when the S&P500 goes tits up on a 10:1 leverage is incredible. 20/30 years ago, only the big boys could do that I think.

        My 20 year view on the 500 is up up and away. My three year view is that a crash/correction is coming. If I can make money on the down……

  2. Another phenomenon I see as a relatively new blessing is freedom from limiting or repressive societal norms, or you could call it the tyranny of majoritarian rule. This is more so in some countries than others certainly, but even within the historically more conservative ones, the winds of change are blowing, to the extent that the politicos there have misjudged the tolerance of the public. Even in the 21st century gender, reproductive choices and sexuality for example could blight your life depending on the arbitrary boundaries within which you were born.

    True there is a wave of populism washing over the planet currently that is reversing hard won tolerance and civilisational gains, but look at the recent referenda results in Ireland. It’s not hard now to forsee in the near future marijuana reverting to its historical role as a human medicine as ever more people reject the ideological ignorance preventing legalisation. (and that’s my opinion as a scientist, not an aficionado)

    I feel my parents had their children when and how they did under pressure to please those in their lives with power over them, even if that was only via emotional blackmail. Equally, had I not been able to divorce when I did, I would have lost the will to live. (and think how many countries this is still not possible to do in) I know that much of the world is not yet this free, but even so, there are big changes from a generation ago; to give one example, urbanisation in Africa is driving a rise in cross-tribal marriages, which used to be a serious no-no.

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