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They were called that most unhappy generation in history. As exaggerated as it may seem, it is safe to say that everyone knows exactly which generation is being described. The average millennium has seen slower economic growth than any other generation in history since joining the workforce, and 62 percent of the millennia live a fortnight to a fortnight. In addition, they earn 20 percent less than baby boomers in the same phase of life. Many millennials failed to make money during the long recovery from the Great Recession. Instead, they were forced to use their savings to retire, rely on high-yield credit, and build student debt even as the global economy grew and the stock market hit record highs.
How can you improve your luck during these difficult times? One of the most effective ways to build wealth is through investing. In addition to new investment vehicles that will make it easier for young people to participate in the capital markets, an entirely new investment framework is in the works that will use blockchain technology to create a new class of digital assets.
Finance professionals have risen to the challenge of attracting this generation cohort, but wealth managers need to step up their game to win the hearts of millennials. So far, the focus has been on user-friendly digital apps and automation – a good start for the Netflix fans. Almost half of millennials who grew up in the shadow of big tech are open to using alternatives to traditional investments like Google’s investment opportunities, according to Accenture.
What are these exotic tools that millennials are using?
The leading example of financial instruments disruption is Robinhood, the stock trading and investment app that took the market by storm and quickly garnered tens of millions of users. With apps like this, making stock trading friendlier in the 21st century, millennials who worked from home during COVID-induced lockdowns have been trading to such an extent that experts suspected they were actually moving the market.
It’s easy to see why high-tech no-commission brokers should appeal to a bankrupt and digitally savvy generation – they want a piece of the pie. For this to work, they need more than just easy-to-use apps.
A more democratic form of investment
The solutions mentioned so far simply take up the existing framework of the capital markets and add a digital layer. Recently, however, an entirely new asset class has been born in an inherently more democratic framework.
INX Limited recently launched the first SEC-registered IPO of security tokens, paving the way for a fully regulated cryptocurrency and digital asset exchange in the US, and offering retail investors a piece of the token pie. Up until now, digital assets (mainly assets in the blockchain) were only available to institutional investors in the USA, although foreign private investors could also access them.
So what’s in it for millennials? On the one hand, assets that are placed on the blockchain can be traded 24 hours a day, 7 days a week. On today’s stock exchange, our money is blocked between 4:00 p.m. and 10:00 p.m. Friday at 9:30 a.m. of Monday. But what if something dramatic happens on the weekend that completely disrupts the market? What if a pandemic completely changes the world? In the latter case, Black Thursday devastated investors around the world earlier this year as stocks plummeted dramatically as national closings were announced around the world.
Weekends are not immune to drastic market changes. In an exchange for digital assets and cryptocurrencies, however, investors are not bound on Saturday and Sunday, as all investors who trade on such an exchange have access to their own assets throughout the day. The Tokenized Investment Framework holds particular promise for millennials who are tired of being pressured by legacy institutions.
How can millennials improve their happiness during these tough times? The answer: Financial Technology / Image: Depositphotos.com
Another benefit is in the technology itself. The tokenization process can convert literally anything from cars to paintings to real estate into tradable assets that can be broken down into stocks. Millennials who want to participate in real estate investments but don’t have the cash to do so can invest in a portion of the property that is broken down into “security tokens” that will generate potential future profits.
And different digital asset companies deal with different aspects of finance. Realio, for example, is building an ecosystem that aims to make investment at the institutional level accessible to a wider audience. Last month, the company, in partnership with Valentus Capital Management, digitized a mutual fund worth more than $ 250 million, opening up opportunities for medium-sized investors that are reserved for the big players in traditional financial markets.
When a generation has gotten into recurring economic turmoil, they only have their wits and minds to achieve the kind of financial stability that earlier generations could more easily take advantage of. In addition, it is time for the financial world to adapt to the 21st century and do more than just standard digitize user-friendly processes and applications. Only time will tell if tokenization moves the financial needle far enough, but it’s a welcome start.