5 Best Investment Options For Millennials

When it comes to investing, millennials have had a rougher start than most generations. Growing up during the financial crisis of 2007-2008, millennials have had to deal with spiralling costs of living, uncertain markets, ever-higher house prices, and now the devastating effects of the COVID-19 pandemic. 

However, all this uncertainty doesn’t mean millennials can’t make effective investments; in fact, it gives them all the more reason to. Building up a successful investment portfolio is one way for millennials to create a secure, stable financial future for themselves. Fortunately, there are a number of different ways to get started as an investor no matter your budget.

If you have the time and the money, buying stocks and shares can be an extremely lucrative investment for the long term. More and more millennials are beginning to get involved in the stock market, with 44% of millennials buying shares for the first time in 2020.

If you don’t feel confident in buying the right shares for your portfolio by yourself, you can also make use of technology to help you out. There are numerous “robo-adviser” services available that will automatically build an investment portfolio for you based on your budget, investment goals and personal values. This allows you to take a much more hands-off approach while still reaping the rewards of stock investment.

Another way to get involved in the stock market without as much effort, and potentially with lower starting capital, is to invest in Exchange Traded Funds. ETFs are parcels of stocks and shares sold as a single unit, based around a specific index or market sector. 

The advantage of an ETF is that you can quickly build a diverse portfolio without having to carefully research several different individual stocks. Because they’re built to match a given index, they’re also less vulnerable to the sudden swings in value that individual stocks can experience, making them a more stable investment if you aren’t keen on risking your money.

If you’re working with a lower budget thanks to low income or high living costs, you can still afford to invest. Some brokers allow you to buy fractional shares, which are smaller portions of a whole share, as the name suggests. These are naturally cheaper than a whole share, so you can begin building a portfolio without having to have a lot of cash to spare.

Another option is micro-investing. Micro-investing services tend to work by taking small regular deposits - either set monthly or weekly amounts, or by rounding up your daily purchases to the dollar and taking the extra - and then investing them for you automatically. This way, you can start earning a return on your spare change without breaking the bank.

Buying a house outright may feel like a very far-off goal for most millennials - the average house price in Australia is now $852,940, which is probably why 61% of millennials are stuck having to rent their home. But buying your own home isn’t the only way to invest in property.

For instance, you might consider buying into a Real Estate Investment Trust. REITs pool their investor’s money and use it to buy and operate a wide portfolio of properties, both residential and commercial. Investors then earn a share of the generated rent income in proportion to the amount they’ve invested, providing an easy source of passive income.

If investing your money elsewhere doesn’t appeal to you, why not invest in yourself? Putting your money into a business venture has a double benefit - it’s a long-term investment for the future, but it also provides you with an income source in the here-and-now. 

What’s more, you can also make use of various government grants and funding schemes to kickstart your business without having to finance the entire startup cost yourself. Small businesses can also benefit from a number of tax incentives, meaning you might not have to hand over as much of your returns to the taxman as with other investments.