Sustainable Investing … the Millennial Way

Millennials are expected to inherit $68 trillion by 2030 from their baby boomer parents.  With this wealth transfer comes a huge potential shift in the way people are investing.  While there is a rising interest in sustainable investing amongst the general population, millennials are driving this demand. They are passionate about aligning their values to their approach to money and careers.  For example, choosing to work at a company because of its stance on social and/or environmental factors.  Or screening an investment with consideration of environmental, social and corporate governance factors. This demand puts pressure on companies to have products available that match specific impact areas.

People of every generation have been interested in social and environmental issues, but now we have the resources and better information to choose what is important to us.  Millennials have grown up with access to technology and the ability to do a simple Google search to screen funds and research individual companies.  In addition to this, there are more options available due to investor demands.  When socially responsible investment options were becoming more available and abundant, baby boomers already had their money in the markets based on their own investment philosophies; however, millennials were just reaching their prime investing years. All of these factors led to millennials having the ability to be picky about where their money was going and cognizant of all the different areas they could impact.

Compared to any other generation, millennials believe that they have the ability to make a change through their investment decisions.  For example, 85% of millennial investors believe that their investment choice can influence climate change, while only 71% of the general population believes this.  Similarly, a statistic from 2021 show that 75% of millennial investors have made or plan to make investment changes within 12 months in response to racial justice movements, while only 50% of the generation population plans to. There are similar statistics for other impact areas, such as plastic reduction, community development, and gender diversity.

Millennials are looking at the world broadly and realizing that they may be able to get more out of their money than just returns.  They are focusing on long-term impact.  The millennial generation has already experienced two major stock market recessions – the Great Recession of 2008-2009 and the market recessions caused by the COVID-19 pandemic.  In addition to market volatility, the Covid pandemic highlighted many injustices that exist in society today. It is probable that millennials will continue putting efforts towards long-term sustainability to combat nerves surrounding market volatility and will continue being value-driven in their investment decisions.

 

Sustainable_Signals_Individual_Investor_White_Paper_Final.pdf (morganstanley.com)

Millennials spurred growth in ESG investing. Now all ages are on board (cnbc.com)

Future Returns: Millennials and Sustainable Investing (kanebridgenews.com)

 

-Madison Moore, Associate Financial Planner

 

Any opinions are those of Madison Moore and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information contained within does not purport to be a complete description of the securities, markets, or developments referred to in this material.  Past performance may not be indicative of future results.  Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation.  Prior to making an investment decision, please consult with your financial advisor about your individual situation.

Incorporating sustainable investing criteria into the investment selection process may result in investment performance deviating from other investment strategies or broad market benchmarks.  Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.

BrokerCheck