While millennials are generally considered a lost generation of investors, new data from Mintos shows they are proving their worth in alternative investing in loans
Millennials, those born between 1981 and 1996, are widely seen as the new lost generation, especially when it comes to finance. Having experienced two economic crises in roughly a decade—the 2008 financial crash and the current COVID-19 pandemic—a significant part of the 20- and 30-somethings in western countries are burdened with debt and have yet to get a fair chance of building a financial cushion.
It comes as no surprise then that millennials might seem to be less inclined to start investing and risk losing their already scarce funds.
Yet new data from Mintos, the EU-leading alternative investment platform for investing in loans where investing starts only from €10 per loan, points to a different story. Over 75% of the total 356,222 investors on the platform are millennials, almost single-handedly building up the market of investing in loans in Europe to €6.6 billion and allowing the company to hold about 45% of the European market.
The majority of retail millennial investors in Europe choosing loans are from Germany, with investors from Spain, Czech Republic, and Estonia following right after. Most of them specialize either in IT or engineering. While the average investment amount per millennial investor in 2020 changed throughout the year, it stabilized at €1200 in the last few months.
“The very fact that we as a company exist is proof in and of itself that millennial investors are not a lost cause,” said Martins Sulte, CEO and Co-Founder of Mintos. “Quite the contrary, they are not only very active as investors, but also as community members, following and discussing the latest news and trends, sharing tips and strategies with others. While millennials might seem to be on the sidelines in terms of investing in traditional assets, they have become the driving force in the alternative investments category.”
A recent Mintos crowdfunding campaign is the latest example of millennials’ enthusiasm in alternative investments. In 10 days, the fintech attracted over 7000 investors on Crowdcube, the overwhelming majority of them millennials, and raised a total of €7.2 million, the largest amount ever raised in continental Europe.
“Our absolute majority of clients are millennials and we continue to see that the new investors choosing alternative investments and joining Mintos weekly are in the same age group, showing that the pandemic has not deformed the trend of interest,” said Mr Sulte. “Back in spring, during the first pandemic wave, we learned that our millennial investors are more bold in comparison with the rest of investors on our marketplace by making more investments and using the opportunity of global market fluctuations.”
Millennials’ financial prospects might also seem hazy because they are worse off than their Baby Boomer parents at their age. However, in Europe, millennials will inherit an estimated $3.2 trillion by 2030. In America, the number is over $68 trillion.
Mr Sulte concluded that while the inherited wealth will open the door for a wide array of investment opportunities for millennials, financial literacy is needed to take advantage of those opportunities.
“Before the wealth transfer period, there needs to be proper education if we want to see millennials investing and making calculated decisions,” he said. “If the knowledge gap is closed, it is only a matter of time when we will see millennial investors in full swing.”