A house in the suburbs, career tenure and pension with the same employer, and a portfolio of stocks and bonds for retirement. Every baby boomer’s vision of the American dream. Until it wasn’t.
The nest eggs of today’s retirees have been rocked by a seemingly endless onslaught of financial calamities, leaving little left to fund those visions of easy-street. First, the tech bubble in 2000, then 9/11, then the housing and financial market meltdown of 2008. Despite the baby boomers losing trillions of wealth, in many instances, folks in their 20’s and 30’s were greater victims.
They saw their childhood homes lost to foreclosure, and their futures mortgaged with student loans and credit card debt as their parents’ savings ran dry. It’s no surprise millennials are taking a contrarian approach to home ownership and stock investing – preparing for the doomsday stock market crash to come again.
How Millennials are Living in Fear of the Next Stock Market Crash
But by trying to avoid the pitfalls that befell their boomer parents, are millennials too skittish to efficiently plan for their own futures? After seeing the data points below, the answer may very well be yes.
- Millennials are saving more – millennials, and particularly millennial parents, are saving around 10% of their income, doubling the 5% savings rate of their baby boomer parents.
- Millennials are avoiding stocks – only 23% of millennials prefer stocks over other investing methods compared to 33% of Gen X and 38% of baby boomers.
- Millennials are less focused on homeownership – Just two in five millennials considered owning a home as a long-term financial goal.
You can certainly point to changing preferences and demographics pushing millennials away from homeownership, Regardless they aren’t buying homes at the rates of prior generations. And millennials could benefit from their apathy towards buying homes – with one big caveat – millennials need to put their savings parked in their bank accounts or under their mattresses to work! But if buying stocks or houses is low on their pecking order, where are they looking?
Millennials Like Commercial Real Estate
You guessed it… Commercial real estate.
According to a recent Harris Interactive survey, 55% of millennials are interested in real estate investing, the highest percentage of all demographics questioned. Similarly, research from Fannie Mae indicates 85% of millennials think real estate is a good investment.
But where does one go without a seven-figure bankroll get exposure to commercial real estate? The simple truth is one often can’t go the traditional crowdfunded route without being an accredited investor which is limited to accredited investors making over a $250,000 a year.
What About Crypto?
While an entire class of assets is virtually locked out for young investors that don’t qualify as accredited investors, the answer has to be to pure democratized investments, right? Blockchain-backed Initial Coin Offerings (ICO’s) give access to virtually everybody to invest money in new ventures. The decentralized lack of institutional control was the key selling point of the 2017 ICO craze and how some made millions through investing in some of these select platforms… And subsequently how so many lost money when that bubble popped.
While blockchain has it’s uses and potential, the lack of due diligence and an objective, independent assessment of ICO’s makes this more akin to gambling. What the cryptocurrency craze among millennials in 2017 taught us was that there is a clear demand for technology platforms that make investing easy while being less volatile.
Online Real Estate Platforms: The Millennial Goldilocks Investment
Online real estate investment platforms, particularly those offering low investment minimums can be the perfect fit for the discerning millennial investor. Streitwise satisfies millennial appetites for real estate investing with only a $1,000 minimum investment that can be done online. And since real estate is generally not correlated with stock performance, millennials fearing the next stock market crash can hopefully rest a little easier. Since inception, Streitwise has generated over 8% annualized dividends for investors making this one of the most stable investments people have made.
And since millennials buy everything online – why not their financial future as well?
Eliot Bencuya is the co-founder and CEO of Streitwise. Eliot has extensive experience identifying, underwriting, and executing value-add real estate investments.
Prior to forming Streitwise, he was a Vice President of Acquisitions for Canyon Capital Realty Advisors and the Canyon-Johnson Urban Funds, where he was responsible for originating, underwriting, structuring and executing transactions in the Pacific Northwest, Northern California and Midwest regions. Mr. Bencuya also held positions at Sovereign Investment Company (a subsidiary of the Marcus and Millichap Company) and the investment banking division of Merrill Lynch & Co. He holds a Bachelor of Arts degree in Economics and International Studies from Yale University, and a Masters of Business Administration degree from the Haas School of Business at the University of California, Berkeley. Mr. Bencuya is a member of ULI.