Millennials are more bullish than any other age group when it comes to predicting their own investment returns, new research shows.
Research from Equiniti (EQ) reveals that of the 2,000 UK investors researched, Millennials (aged 25-40) predicted an average return of 8.10% annually over the next 10 years, outdoing Baby Boomers (57–75-year-olds) by almost a percent point (7.27%). Gen Z (aged 18-24) predicted an average of 8.06% and Gen X (aged 41-56) an average of 7.15% in comparison.
Almost a third (31%) of Gen Z thought they’d consistently achieve double-digit returns over a 10-year period too, compared with older investors who adopted a more cautious outlook. Millennials were just behind them, with 28% believing they’d achieve double digit growth, well ahead of the 17% of 41–56-year-olds who thought they’d average double-digit returns, along with 18% of 57–75-year-olds.
As well as backing their stock picks, younger investors also insinuated they were fully up to speed on the make-up of their portfolio. 31% of 18–40-year-olds described themselves as ‘a fully confident and informed shareholder’ – contrasting to 16% of 57–75-year-olds.
Conversely, older investors were more than twice as likely to define themselves as very unconfident, with 35% of 41–75-year-olds agreeing that ‘I understand very little about my portfolio and I do not feel I am making informed decisions regarding my shares’. Just 17% of 18–40-year-olds selected this option, implying a stark contrast in terms of financial engagement.
Thera Prins, CEO, UK Shareholder Services at EQ comments: “Financial literacy is still a challenge in the UK, but based on these numbers, perhaps the tide is starting to turn. Never before have we had such easy access to the markets, and looking at how bullish younger investors are, alongside their general attitudes to investing, we might soon start seeing the younger generation educating their parents on where to put their money. Younger investors have time on their side, so riskier stocks which have the potential for higher returns may well be what they’re betting on to deliver these returns, when markets have been especially volatile this year.”
Aside from their confidence, younger investors surveyed also showed signs that they were more engaged than their older peers. Almost three in 10 (28%) of 18–24-year-olds and 29% of 25–40-year-olds said they ‘regularly’ vote in AGMs, with another 36% and 33% respectively saying they vote ‘on occasion’. This compared with just 19% of 41–56-year-olds and 21% of 57–75-year-olds who said they vote regularly.
When it came to what issues would compel investors to vote, concern for the value of the share was top by survey respondents (63%), followed by environmental concerns (58%), labour standards (57%), the financial success of the firm (55%) and governance, such as Board make-up (53%).
This focus on returns was also reflected when asked what factors influenced their decision to buy or sell stocks. Predicted returns (43%) was the most popular option, trumping ESG concerns, with environmental policies and actions picked as the primary motivator by just 14%. However, there was a generational difference in attitudes in this regard, with 18% of 18–24-year-olds saying it was their top concern, versus 11% of 57–75-year-olds.
Prins concluded: “We’ve heard a lot about the rise of retail activism following the pandemic, but looking at the data, this behaviour could well be here to stay. Younger shareholders are voting more often to hold Boards to account, which is good news for the industry as a whole. The challenge now will be addressing the final 19% who never vote at AGMs and changing the minds of the 34% who say they don’t do so because they don’t believe their vote will make a difference. The industry would do well to prepare itself for more and more investors asking questions and holding them to account, as they engage more on the issues that matter.”