July 31, 2018
Only a handful of millennials find their way into the investing world, a study by Keytrade Bank shows.
Investing, it very rarely appeals to the imagination of the average millennial. According to the internet bank Keytrade Bank, only one in eight millennials invests. That while no other generation can put aside as much money as the so-called generation Y.
Research by Keytrade Bank shows that millennials save 400 euros per month on average. The majority of that capital is parked on a savings account. The popularity of the savings account is remarkable given the historically low savings rate. Why do millennials have to look for other horizons?
1. Historically low savings interest
Those who park their money on a savings account today must be satisfied in one out of three cases with an interest rate of 0.11 percent, the absolute minimum in our country. Savers who compare savings books can earn a multiple of that return. MeDirect, for example, recently launched the ME6 Savings account and the ME1 Savings account. Those savings books bring 0.40 and 0.26 percent respectively.
Such savings books are the ideal savings product for people who want to save for, for example, the purchase of a new television. Those who want to keep their purchasing power, are not in the right place with the savings books. At the moment there is not a single savings account that brings in enough money to cope with inflation. It set 2.17 percent in July. Anyone who still wants to maintain their purchasing power must take risks.
2. Possible to invest with small amounts
More and more financial players are launching products tailored to small investors. One of those products is the investment plan. Thanks to an investment plan it is already possible to invest from 25 euros per month. The invested capital is spread over several investment funds in order to spread the risk.
At Keytrade Bank, for example, it is already possible to subscribe to an investment plan from 25 euros per month. Investors can choose from three predetermined plans or they can put together a plan themselves. In the latter case, they can choose from 40 funds. Traditional players such as BNP Paribas Fortis and ING also offer similar plans. Interested in an investment plan? Then definitely read this piece.
An investment plan is indeed associated with a number of costs. The majority of traditional players still charge entry fees that can be as high as 3.50 percent. This is not the case with internet players, such as Keytrade Bank.
3. Spread risks over time
Unlike the older generation, millennials have sufficient time to spread the risks over time. They can recover much more easily from a possible stock market crash. Someone who starts investing at a later age sometimes has insufficient time to make up for any losses.
Millennials who have sufficient capital may, for example, consider entrusting their money to an asset manager. After all, asset management is no longer exclusive for the super rich. For example, it is possible to get into the online broker Binck from 10,000 onwards in a asset management plan. According to Binck, there are sufficient reasons to start investing at a young age. “A low statutory pension, high inflation and falling purchasing power create uncertainty about the saver’s financial future. It is therefore not a bad idea to put the assets to work, ”says Binck.
MeDirect is another player that offers its clients the opportunity to invest in an asset management plan with little capital. At the fund specialist, investors can entrust their capital to a specialist from 5,0000 euros.
As with any other investment, asset managers must determine the profile of their client. The broker will propose a customized plan based on that profile. Those who opt for asset management usually pay a management fee and any costs associated with the investment instruments. Some brokers also charge performance fees. At Binck, for example, the total costs vary between 0.85 and 1.65 percent.