Story Highlights:
- Millennials — the 92 million Americans born between 1980 and 2000 — will become the biggest consumers in history by 2030.
- The generation’s buying habits are already shaking up major industries, providing a great investment opportunity.
- One millennial money investment tool has handed investors a 24%-plus gain this year alone.
The American dream is alive and well — but it’s definitely changing…
Millennials are poised to become the nation’s biggest consumers by 2030.
But they don’t spend like baby boomers.
The fundamental difference is that boomers primarily value stuff, while millennials value time.
You can see that in younger Americans’ desire for experiences. According to the Harris Group, 72% of the nation’s 93 million millennials prefer experiences over things, and two-thirds are currently saving for a trip — not a big car or home.
They are less concerned with owning and more concerned with conserving both their time and their assets.
And we’re starting to see a real impact on the economy.
As a result, I also see a tremendous investment opportunity that capitalizes on the seismic shift in consumer trends that millennials are driving with their unique approach to money and services.
For instance, millennials are bucking a key trend that has historically been one of the pillars of the American economy over the last half-century: homeownership.
It’s not so much that they don’t aspire to own a home. Everyone does, at the right time in their lives. It’s that they don’t want to own a big home.
Over the last century, the average size of new homes is up 74%. But millennials have had enough. They value their time more than anything, and that means they prioritize neighborhood character and the convenience of getting to their jobs and amenities over home size.
Millennial money also values convenience when shopping: They are 40% more likely to purchase “fast-moving consumer goods,” such as packaged foods, beverages, toiletries and over-the-counter drugs, online.
And they prefer to use their mobile phones to make purchases. They also like subscription services far more than older generations.
Those preferences have given rise to a host of internet-based and subscription services — making stock superstars of companies such as Netflix, Spotify and Uber.
That’s also why nearly 4 in 10 millennials say they’d rather use an online or branchless bank, and two-thirds use electronic payments.
Unfortunately for traditional banks, 43% of millennials think that their bank provides a poor mobile experience. That’s why cryptocurrencies such as bitcoin and digital money services such as Venmo, Paypal and Square’s Cash App are gaining popularity with younger Americans.
When millennials do opt for bricks over clicks, they prefer the one-stop aspect of supercenters over other shopping experiences.
You see, it’s all about not wasting time.
Best Way to Profit From Millennial Buying Habits
I just missed the millennial generation by a few years. But that doesn’t stop me from following — and living — the big millennial money trends that are disrupting the old-world ways.
For instance, I detest wasting time. So, I often opt for mass transit over driving so I can work while I travel. I shop online instead of going to malls and shopping centers. And I’m currently scouting out properties “in the sticks” for the views, not the size.
Many companies are adapting to this movement. They are shifting to causes they care about and advertising to millennials through influencers that their target market trusts.
Corporate America is desperately trying to stay relevant with this generation. Some will be successful, but most will fail.
In order to exist in the new world, older companies will need to embrace technology and dramatically transform to satisfy millennial buyers.
Some of the most exciting companies that are leading the charge are gearing up for an initial public offering. Here are two great ones driven by millennials that I’ve got my eye on:
- Airbnb Inc. is the ultimate experiential platform: a marketplace for vacation homes all over the world, as well as for experiences near the properties. Rather than own a second home or get locked into a timeshare, millennials are using Airbnb to get a different authentic experience every time they travel. More than 80% of millennials want to test out new places by living like the locals do. And Airbnb gives them that opportunity.
- Robinhood Markets Inc. is a platform for transaction-free trading of stocks and cryptocurrencies. The company sets itself apart through ease of setup and an intuitive, easy-to-use mobile app, and has grown into one of the biggest names in fintech. This will be a great play with nearly 1 in 10 millennials saying that cryptocurrency is their top choice for long-term investing.
Paul Mampilly and I will be watching for these companies to go public and determine if they are good investment opportunities.
In the meantime, if you want to buy into the new millennial economy, you can add an exchange-traded fund (ETF) to your portfolio.
The Global X Millennials Thematic ETF (Nasdaq: MILN) is a great bet. It’s an ETF that invests in companies likely to appeal to millennial money.
The companies represented are in social media and entertainment, food and dining, clothing and apparel, health and fitness, travel and mobility, education and employment, housing and home goods, and financial services.
Since January, the fund is up more than 24%.
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