The Changing Investment Landscape For Millennials
Personal finance, real estate, and investing have become quite different for millennials than for previous generations. This is largely due to technology, as well as a notable shift in the workforce, from traditional full-time work to freelancing.
Upwork, a market platform for clients and freelancers, partnered with the Freelancers Union to conduct the Freelancing in America Survey, which reported that in 2019, 35% of the United States workforce were freelancers. More and more people are choosing independent work and owning solo enterprises, mostly for the freedom and flexibility that it allows for. Freelancers typically have the ability to set their own daily working hours, as well as the physical location of their office.
However, unlike full-timers, temporary workers do not receive benefits like health, life, and disability insurance or pensions. In the wake of the 2008 recession, many employers were prompted to restructure their companies in an effort to reduce costs. Since then, many corporations have opted to hire more contingent and contract work, rather than employing full-time workers. This means higher job instability for those who work on contract, rather than as full-time employees. Unstable core income means that one must set aside larger funds as emergency savings for periods of unemployment. Millennials must plan early, and depend on their own investment decisions to ensure they can retire comfortably, as employers no longer offer the same benefits they once did in prior decades. This may affect one’s ability to meet all financial goals, such as owning and investing in real estate property. It can be difficult for freelancers, contractors, or part-time workers to qualify for a mortgage or save enough to afford a down payment.
The lives of millennials have also been enormously impacted by technological innovations. In intersection with investing, technology has given birth to cryptocurrency.
“A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. “Investopedia
Some investors, including millennials, are opting for cryptocurrency, as it has made investing more secure and accessible. For those who cannot invest in the real estate market due to their lack of resources, a new form of investing that leverages technology is available.
Fractional investing is owning a share of one piece of property. Imagine being to own a faction of a home where the minimum investment is only $67.40. This can reduce the barrier to entry that many face when it comes to investing in real estate. Fractional real estate makes it possible for you to own and benefit from a single portion of ownership, without having to own the entire property. Therefore, fractional investors do not need to go through the hassle and stress of acquiring a mortgage or working with a real estate agent.
While most invest in stocks, bonds, and electronically traded funds, fractional investing allows you to diversify your portfolio into real estate, in a more attainable way. Moreover, it is a form of tokenization, meaning that your ownership of a share of a property can be more easily converted to cash.