A Finance Expert Says This Is How You Should Invest Your Money
To invest like a millennial, you need to start doing it early.
Millennials are thought to be impulsive with their finances, preferring to live in the now and experience life to the fullest.
While such is the nature of youth; it may be an inaccurate or incomplete picture at best.
Millennials are known to spend generously on experiences and making the most out of life (hashtag: YOLO!), but they are no different from other generations when it comes to knowing the value of investments.
“Millennials are very consumption-driven. They typically allocate a significant portion of their money for experiences such as travel, food, and education,” said Sheila Tan, president and CEO of BPI Asset Management and Trust Corp. “They save and invest to be able to finance their short-term goals.”
In terms of investing, what makes them different are their preferences.
They prefer simple investments.
Given their fast-paced and active lifestyle, this group of young people doesn’t like complexities. They want everything to be simple, straightforward, and easy to understand.
When it comes to investments, they gravitate toward simpler and more flexible products, such as Unit Investment Trust Fund (UITF), which is offered by BPI Asset Management and Trust Corp. A UITF enables a person to start investing for as low as P10,000. Without putting in much time and effort, the client knows his or her money is growing.
A UITF is an open-ended, pooled trust fund operated and administered by a trust entity. It provides investors with a simple and efficient way of investing their money in a wide selection of financial instruments and securities. UITFs have no maturity date. Instead, some UITFs in the market have a minimum holding period, and redemption within this period subjects the investor to a certain fee.
A unit represents a prorated share of undivided ownership in a particular fund. This means a UITF investor owns a share of all the investments in the fund, rather than a specific investment in that fund.
They monitor their investments online.
Often described as “tech dependents,” millennials rely heavily on technology for most of their transactions—including their finances. They are used to getting the information they need with just a few taps on their smartphones, and the same goes for their investments. They prefer to monitor their money any time and anywhere through their gadgets.
“They are a generation of digital natives, hence they prefer transacting online through smartphones and laptops,” Tan explained. “It is equally important that they are able to view their investments’ status online, any time.”
For its investors, BPI has the BPI Investments Online, an internet service that lets clients access a comprehensive suite of UITFs. Available 24/7, this platform allows clients to apply for an investment account, place subscription and redemption orders, and monitor their investment portfolio.
They start investing early.
Contrary to the stereotype that millennials are irresponsible spenders, the average age a person starts investing is at 24 years old, according to the latest customer data of BPI. As information is readily available, millennials are able to learn on their own without any proper training on investments with the goal to eventually make smart decisions on where to put their money.
“Since information is accessible at their fingertips, they do their own research by watching videos, reading blogs and reviews, and comparing financial product providers before deciding on the investment product that suits their needs,” Tan explained.
While they do begin investing early, their investing pattern is usually irregular. “This means some of them only set aside money for investments when they feel like it, or when they feel the time is right to invest,” she said.
Still, Tan said that despite their erratic investing, these millennials have the right mindset that will give them a better chance of affording the lifestyle they love.
To guide this generation of investors, there are institutions like BPI Asset Management and Trust Corp., which employs experienced investment managers and analysts who can help millennials make sound investment decisions through investment products that meet their preferences.