The mass of millennials in this country is surpassing the bulge of baby boomers. According to recent U.S. Census Bureau estimates, millennials now log in at 75.3 million people, outnumbering the 74.9 million baby boomers.
Millennials are those born between the early 1980s and the early 2000s — in other words, the children of baby boomers. They are now in their late teens to early 30s, and most of them are out there buying, selling and planning for the future.
The millennial generation is also known as Generation Y, because it comes after Generation X, the post-baby boomer cohort born in the late 1960s and the 1970s. The millennials have been characterized as open-minded, permissive and confident, to the point of being unrealistic and even delusional about their prospects. Despite the great recession, they tend to be optimistic about the future, and perhaps because of the great recession, they are becoming more focused on material things.
Millennials are young, and they exhibit all the characteristics of people just starting out in life who are beginning their careers and looking forward to personal development and financial success. So, is there money to be made from investing in millennials? Here are four ideas:
Social media. It’s no secret that 20-somethings spend a lot of time chatting, conversing, playing games and watching videos on their smartphones. One way to catch the trend is to invest in Apple (AAPL), Facebook (FB), Google (GOOG) and Twitter (TWTR). But millennials are as fickle as they are innovative, so instead of an individual stock, you might be better off turning to the Global X Social Media Index ETF (SOCL), with its big investment in LinkedIn. An alternative is the broader Fidelity Information Technology fund (FTEC). Its largest holding is Apple, and its micro expense ratio of 0.12 percent can only help its performance. A more conservative way to play the trend might be Fidelity’s Puritan Fund (FPURX). This is a more diversified mutual fund that offers Apple as its largest holding and also holds positions in Facebook and Microsoft.
The on-the-go lifestyle. Millennials are young. Most of them do not yet have families. Instead, they are looking for a new job or a better job, and they are ready to move anywhere, preferably to a hip city like Boston, Austin or San Francisco. They have not put down roots. Instead, they live in coffee shops, hang out in bars and take off for mini-vacations. One ETF, the Powershares Dynamic Leisure & Entertainment Portfolio (PEJ), serves up Chipotle Mexican Grill as its largest holding. Fidelity’s Contrafund (FCNTX), a more conservative, large growth mutual fund, has significant holdings in Starbucks and Marriott International as well as Apple, Facebook and Google.
Settling down? Millennials are in their 20s. The question is, will they, like their parents, settle down as they get older? Will they have children, buy houses and feather their nests? Nobody knows for sure. But if you think so, then you can get ahead of the curve by investing in real estate, home improvements and consumer staples before everyone else moves in on the idea. There are several homebuilder ETFs, including SPDR Homebuilders (XHB) with building materials company Owens-Corning as its largest holding. Vanguard offers a broader Consumer Staples ETF (VDC) with diaper maker Procter & Gamble as its biggest investment and a baby-size expense ratio of just 0.12 percent.
Financial services. If the millennials start buying houses, they will need mortgages, which will involve the banks. And with the disappearance of pension plans, millennials will also be responsible for their own retirements, which suggests financial companies may in the long term profit from the aging of millennials. There are more than a dozen financial funds, including Vanguard’s Financial ETF (VHF) with a 0.12 percent expense ratio and Wells Fargo and J.P. Morgan as main investments. There’s also the Financial Select Sector SPDR ETF (XLF), which boasts Warren Buffett’s Berkshire Hathaway as its top holding.
Remember, these are just some possibilities for what might be the next new thing. So make up your own mind and do your own homework. But betting on the future of the millennials might not be a bad thing.
Tom Sightings blogs at Sightings at 60 .
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4 Ways to Invest in Millennials originally appeared on usnews.com