Singaporeans do not just save more and owe less, they also invest more. The latest OCBC Financial Wellness Index 2021^* shows that about 82% of Singaporeans have investments – a boost of 13% from last year.

But interestingly, it is the Millennials who made the biggest impact among investors.

Way to go, Millennials!

Approximately 86% of Millennials in their 20s have investments, up from 64% in 2020. This 22% bump stands out from the other age groups, where the growth ranged from a single digit for those aged 55-65 years to 16% for those in their 30s.

The rosy turn of events is indeed a welcome change from last year when Millennials – aged 21 to 39 years – were observed to be the most worried about money, with 49% of those surveyed in 2020 preoccupied by financial matters, compared with 37% of Generation X or 26% of Baby Boomers.

Millennials’ foray into investing could have started when the pandemic accelerated digital adoption among Singaporeans. The combination of commission-free trading apps and Millennials’ affinity for technology could have created an irresistible mix for them to test their financial savviness via the array of investment options available on these platforms.

The bullish market environment, following the stock market crash in February 2020, could have also served to spur Millennials on, feeding their FOMO (Fear of Missing Out).

Who moved my avocado?

To fast track their financial wealth, Millennials have moved away from traditional investments like Singapore stocks and unit trusts, in favour of higher volatility investments such as cryptocurrencies, foreign stocks and ETFs.

And they don’t shy away from speculating either when it comes to investing, a trait often frowned upon in traditional investments. Up 4% from last year, about 35% of Millennials do so compared to 31% in the next group that is made up of Singaporeans in their 30s.

Millennials have often been referred to as disruptors in more than one aspect. Born between 1980 and 2002, they have grown up in a time of rapid change, and this has given them a set of priorities and expectations sharply different from previous generations.

But the downside of investment habits that stray from prescribed patterns is that fewer Millennials are achieving their investment target.

The OCBC survey shows that more Millennials who are in their 20s and seek professional financial advice (and use digital financial tools) are on track to meet their investment target.

The Robinhood generation

While their stock picking style may be at odds with the traditional approach of fundamental, bottom-up analysis, Millennials do not appear to be carefree with their money.

External research shows that though Millennials may turn to investments like cryptocurrencies to earn a quick profit through buying and selling, many also plan to hold on to their favourite coins for the long haul as they genuinely have a positive outlook on the underlying blockchain technology.

They enjoy the camaraderie found in online communities, and take part in meme stock rallies, but at the end of the day, they want to invest in what they connect with, whether it is stocks, coins or digital assets.

The disconnect between Millennials and traditional investments may lie in this generation’s preference to rely on their own research, as opposed to using insights disseminated by institutions.

In the Millennial era, the paradigm has shifted towards “democratisation of finance”, a phrase used to describe a rethink of the financial system where previously inaccessible financial markets and investment options are now attainable by just about anyone. Trading 24/7 on always-on exchanges is far more intuitive to an internet-savvy generation than picking up the phone and calling a financial professional just to get in line for that IPO queue.

Ok, boomer

Despite all the haste to make more money, Millennials' aspirations are rather universal! According to the OCBC survey, their goal is to retire more comfortably, get richer, and spend on people they love more generously.

And the best way to achieve this is through the old-fashioned way of practising proper asset allocation to ensure they do not blur that fine line between investing and trading.

Asset allocation is a strategy for investing that is designed to reduce volatility by diversifying across a variety of investments such as stocks, bonds and alternative investments like commodities, real estate, rare gems and yes, blockchains and meme stocks. It will help underline what to sell, what to buy more of, and what to continue holding based on research, and not online euphoria.

The asset allocation that works best for an individual at any given point in their life will depend largely on their time horizon and their ability to tolerate risk.

According to a landmark study by Brinson, Singer & Beebower, asset allocation determined 91.5% of the portfolio performance, while market timing was 1.8% and security selection was 4.6%. What’s more, asset allocation is effective when asset classes are unlikely to generate parallel returns at the same time.

In the financial space today, there are sufficient products to appeal to investors of all generations. OCBC Digital platforms allow customers to invest at their own convenience after doing their own research, by providing jargon-free investment information and investment purchase journeys that are simple and easy to follow.

With our virtual wealth advisory service, customers are still able to get the same level of sales and wealth advisory in place of face-to-face meetings at our branches.

While Singaporeans have continued to build on their good financial habits, for it to prevail we need to ensure that Millennials adopt an investment philosophy that enriches their world, as they seek to enrich the world around them.