Global Investor Study

Are millennial investors facing a perfect storm?

Depressed wages, escalating living costs and a struggling global economy – millennials have a lot on their plates. They need investment income to support short and long-term financial aspirations. Does something have to give and is the perfect investment storm brewing?


The Schroders Global Investor Study 2016 found that millennial investors (those aged 18-35) have unrealistically high income expectations, a worryingly short-term investment outlook, and many dependencies to support both now and in the future.

The result could see millennials fall drastically short of their investment goals.

Schroders Global Investor Study revealed:

  • Millennials demand more income (10.2%) than other investors (8.4%)
  • Millennials have an extremely short-term investment outlook, with 63% holding investments for less than 2 years
  • Millennials are risk averse, prioritising capital preservation and a return higher than inflation when choosing an investment
  • Millennials’ income is being stretched across a wide spectrum of dependencies from supplementing salary and pension to supporting children and buying houses

Is a financial storm brewing?

It is a potentially toxic mix. We live in a world where most developed nations’ interest rates are at or below 0.5%, and, in some cases, heading lower. The average stockmarket yield is just 3.8%1.

To get the higher income they demand millennials would either need to take more risk or hold investments for a longer period in order to ride out market cycles, neither of which they seem willing to do.

The major risk is that millennials are labouring under two misapprehensions:

  • Their investments will grow faster than is realistic
  • The pot they ultimately do build will pay a far higher income than is likely

Compounded over a 20 or 30-year time frame, the gap is potentially huge, making the mismatches between expectation and reality identified by the Schroders Global Investor Study 2016 a cause for real concern.

Stretching incomes to the limit

To make matters worse, millennials have a far greater number of dependencies than older generations over which their income is being stretched.

Schroders Global Investor Study found the main reasons millennials invested were:

  1. To supplement salary (46%)
  2. To grow a portfolio (41%)
  3. To supplement pension (35%)
  4. To provide income for children/relatives (30%)
  5. To buy something other than a home (28%)
  6. To pay for a deposit for a home (26%)
  7. To pay education fees (26%)
  8. To pay for healthcare (22%)

Yet, according to a recent Guardian newspaper study, “a combination of debt, joblessness, globalisation, demographics and rising house prices is depressing (millennials) incomes”2.

The chasm that has opened up between millennials’ investment goals, their unrealistic income expectations and short-termism needs to be addressed, otherwise we could be heading for another social and economic crisis.

For the full story and interactive infographic visit or download the full report below.

1. Source: FTSE, S&P 500, CAC, DAX, Shanghai, Nikkei, ASX, Hang Seng, Bovespa, Mexbol. Average forward 12-month yield across 11 indexes as at 18 May, 2016, according to Bloomberg data.


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