Millenials and the Markets

General
1

I was just reading around to know the increased craze of markets around the world post-COVID and what I found led me to dig more into it.

It appears that COVID was not the only wave that was rising since its outbreak. The coronavirus outbreak stunned financial intellectuals when new and young investors started to enter the stock market and began to invest significantly. Millions of young Indians have taken to stock trading during and post the pandemic.

Basic stats:

Active investor accounts rose by a record 10.4 million in 2020, according to the data from the country’s two main depositories. Retail ownership in more than 1,500 companies listed on the National Stock Exchange of India jumped to 9 percent in the third quarter of 2020, the highest since March 2018.

India’s retail trading boom has been fueled by pandemic-driven restrictions and job losses that left millions of people at home with little to do. The relentless stock market rally since March 2020 has drawn in more investors. The rally, probably one of the major reasons that attracted young investors into the market.

I do not really believe it was tough for them to participate as the new-age tech brokers have eased the complexity of entering the markets.

image

Of the country’s total new accounts, the vast majority were opened by millennials aged 24 to 39, according to separate data from markets regulator, the Securities and Exchange Board of India.

What percentage of the market do they form?

The data shows this surge in new investors is being driven by young investors. Of the total users of BSE, 38 percent are in the 30-40 age bracket, followed by 24 percent in the age of 20-30, the stock exchange data showed. What is also worth noting is that the numbers of users with the age of less than or equal to 20 accounted for 5.9 percent as of June 2021, compared to 3.9% in May 2020 and 3% in January 2016. Source.

This just proves how the participation of young Indians has increased because of the pandemic.

An article by Forbes mentioned that the surge in the growth is due to the mobile trading apps that do all the required ease of access. Do not really find a way to not believe this, personally. Major stockbrokers in the country did not only see new accounts being opened, but the major chunk of the new accounts were between 20-30 years.

In a country, where there is still lack of retail participation in the Financial markets, I believe this surge and demand driven by youth surely is a great start for a better and more involved industry in the coming years.

I was not one of those guys who started investing during the pandemic, but still the pandemic help me get my strategies and ways to work in the market right, and gave me an opportunity to learn and improve.

I am very curious on this topic to be explored more and will surely do. However, what do you guys feel about this trend and the Millenial’s participation in the stock market? Would it really keep increasing or was it a short-term bull market with such young investors?

Also, do write about the things that a millennial or a young investor should know while investing in the stock market.

4 Likes
2

Well written :100:

2 Likes
3

Some other common behaviours I see in Millennials around this are :

1. Reducing Brand Loyalty : Finance being a Business of Trust was centered around life long relationships and Brand Loyalty. Say if someone did Business with a Bank in 1970, they were more likely to stick with the Bank throughout their lives and knew everyone on the Staff of that Branch. Money was personal. But not Millennials, just like in other things, this generation switches constantly, sometimes for no other reason but to try out something “fresh”. This effect can be seen here in this forum too, where people asking I am already using these 3 things, can I get a review for the 4th, thinking to try it out.

2. Gamification : Give Millennials the carrot of touching buttons, to get something in return, or see a scoreboard tick, or freebies, or XP Boost. This behaviour of turning something seemingly serious and technical and turning it into Candy Crush, for better or worse does work in Finance now as well. There is absolutely no valid reason at all, why someone should stay on a Finance app for a second more than required to do the work. But now apps are made in such a way that you would forget what exactly you came to do there.

So I see these two narratives also shaping this Generation’s financial behaviour play out this whole next decade or so.

1 Like
4

One thing that has also increased the financial inclusion of millennials in the current scenario is basically the entire financial climate and the way it is being presented and marketed. Was just reading around this topic and found out this decent article:

Social media does provide a push but one of my observations is that youths are also attracted to the markets due to the new age companies getting into IPOs. The new-age businesses are not that hard for the youth to connect with as they already understand them.