The millennial generation has seen some hard financial times. Thanks to the 2008 stock market crash and the downfall of the economy just prior to 2001. So, it should come as no surprise that this generation is trying to think outside the box and to find new paths for their investment needs. However, we need to remember one of the greatest proverbs of all time: “Don’t put all the eggs in one basket”
Witnessed the Bursting of the Dot-Com Bubble
In 2001, many older millennials were nearing the end of their college careers. They witnessed the tragic end of the first wave of online businesses. Prior to social media sites that wound up being worth billions and the industries that sprung up around them, there were disasters like Pets.com and eToys.com. Both of which raised (and spent) quite a bit of cash before going bankrupt in the early 2000s, taking most of the industry with them. This meant that older millennials – those born in the early 1980s – were just finishing college and about to enter the workforce. Unexpectedly, the economy took a nosedive. Unable to find jobs, many of them stayed with their parents until things recovered in the years after 9/11.
Affected by the 2008 Stock Market Crash
Just when things began to get better, the stock market crashed in 2008, thanks to subprime mortgages. As it turns out, the entire reason why the economy recovered (slightly) after 9/11 was due to banks. Banks were loaning out money like crazy, some of it to people who couldn’t quite pay it back. The crash of 2008 affected some of the same millennials who couldn’t find work back in 2001. This due to the “last-hired, first-fired” policies held by the companies who employed them. Consumer spending went down. Which affected the trucking industry, and everything spiraled from there. Due to the high rate of unemployment and the lowered Fed Funds market, the financial situation in the United States seemed dire.
Where Does This Leave Millennials?
The millennial generation, usually described as those born between 1980 and 1997 were left wary of traditional currencies and even the stock market. They see the traditional markets as unstable. Additionally, they seem to be easily manipulated by the whims of Wall Street and the Federal Reserve Bank. It’s rare for any single generation to witness a large financial crash, . Let alone two in such a short span of time. Especially after so many decades of market stability.
Millennials Also Have More Debt
People in this generation tend to have a large amount of debt when compared to their annual incomes. Thanks to inflation, the cost of college tuition has gone up by around 237% among in-state public schools. That being said, millennials are among the best-educated generation in this respect. This means that the men and women who fall under the “millennial” umbrella not only have seen economic uncertainties as far as their careers go. They have also spent quite a bit of money obtaining their college degrees. When you combine that with the inflated costs of living, millennials are saddled with large amounts of debt with little relief in sight, except for investments, of course.
Larger Returns with Non-Traditional Currencies
The millennials have faced hard financial times. They obviously want more proverbial “bang for their buck” when they do have money to invest. This group favors investing models that have a much higher rate of return. Even if they seem riskier at the outset. Bitcoin, which started in 2008 and has to be mined for is seen as a good investment. Since its price has remained fairly steady over the past few years. That is unless it’s purchased outright from someone who owns it. This cryptocurrency is unregulated and is entirely digital. Although neither of those things bothers millennials who have a healthy distrust of traditional financial markets, yet favor all things computer-based.
Where Does This Leave Gold?
Although gold bullion is still an extremely worthy investment, it has some disadvantages when compared to Bitcoin. Gold is a very physical currency, which means that it has to be stored someplace. Bitcoin does not, since it’s entirely digital. Yes, the cost of gold has risen of late/. Nonetheless, it’s still seen as something favored by older generations. For example, those who either don’t trust or don’t understand what Bitcoin is all about. Millennials, on the other hand, tend to go in their own direction. Even when it comes to investing their money. Gold has basic value for two reasons:
The Downside to Bitcoin and Upside to Gold
Millennials may favor Bitcoin because it currently has a high rate of return. However, the word to watch out for here is “currently.” The market for Bitcoin may not remain this stable in the future. I may leave those who invested in it looking for something else. This is where gold bullion comes into play. Gold has a history of stability and although it might be considered an “old school” investment. This is due to its prices will only increase over time. On top of this, the gold market is regulated. This gives investors some protections that don’t exist with Bitcoin. Sometimes it’s better to play it safe, which is a lesson millennials and people from other generations might need to learn quickly.
This article is provided as a third-party analysis and does not constitute any financial advice, which can only be provided by a certified financial adviser.