Millennials began coming of age during the dot-com bust, and for those who graduated a few years later, during the Great Recession, financial prospects looked even dimmer. Being cost-conscious was a necessity, not a choice, for many members of this generation.

That meant keeping spending under control and searching for savings wherever possible. Three in four millennials keep close track of what they’re spending and two out of three stick to a budget, compared to just over half of Baby Boomers, one study found. That means the generation often disparaged as entitled has developed an intimate familiarity with low-cost retailers.

Now, as millennials have grown older and started to sock money away in 401(k)s and other securities accounts, their penchant for bargain hunting is showing up in their investments. Five low-cost retailers were among millennials’ top 100 holdings in the third quarter of 2019, our research reveals.

Thanks to partnerships with the financial industry’s leading online investing platforms, we get an inside look into the behaviors of millions of investors, including millennials. We dug into our proprietary data on stock positions in self-directed accounts to get a sense of what they’re investing in. We compiled our major insights in the Next Investor Outlook, our quarterly report on these investors.

How tight budgets have shaped Millennial investing

Even with budget discipline and frugal habits, millennials carry an average of $28,000 in debt. This may explain why they see the value in low-cost brands like Costco, which became the No. 22 stock holding for investors of this generation in the third quarter of 2019, according to our report.

Discount retailers Walmart and Target also showed up in the Top 100, as did that old standby of inexpensive meals, McDonald’s. Home Depot, which also made the list, may not be strictly a discount retailer, but its do-it-yourself home improvement and repair offerings also fit the budget-conscious ethos of this generation of investors.

Not all the money millennials owe comes from student loans. Credit cards are their main source of liabilities, so they may see investing in these revolving lenders as one way to claw back a bit of that debt load. Credit card giants Visa and Mastercard not only registered among the top 100 millennial investments, both made it into the top 25, with Visa at No. 15 and Mastercard in the No. 24 slot.

It’s not that Millennials don’t understand the value of splurging every now and then: Starbucks clocked in as their No. 21 investment.

Why does it matter?

Last year, millennials overtook Baby Boomers and became the largest U.S. generation, with 75.4 million members. Boomers declined to 74.9 million as the members of that generation, which peaked at about 79 million in 1999, died off. Two key facts make millennials an important demographic for the financial industry:

  • They have more money to spend and invest as they’ve moved into their prime earning years. Half the global workforce is composed of Millennials, who are expected to account for 75 percent of workers in the United States by 2025.
  • Second, they’re set to benefit from a massive windfall. Millennials in North America will inherit more than $30 trillion by 2030, according to an Accenture report.

Opportunities for financial services providers

For money management or financial advisory firms interested in working with millennials, our findings suggest several opportunities.

  • Consider where millennials are coming from as well as where they’re heading when discussing how to achieve a portfolio allocation that fits their needs and goals.
  • Emphasize the importance of reaching beyond personal experience and knowledge to build a balanced portfolio.
  • Adapt investment strategies to include exposures to evolving market trends to ensure millennials’ interests and motivations are addressed in their investments.

For more details about our proprietary data, the full findings and what they mean for financial services providers, view the data:


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