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Trading Generation: Three Millennial Investing Trends

As the biggest generation in history, millennials are slowly changing many common trends. Learn how to potentially benefit as an investor.

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As the biggest generation in history, millennials are slowly changing common demographic trends by living longer with parents, being much more technology-savvy, and putting a premium on services over acquiring goods.

With the oldest of this generation now in their mid-30s, millennials’ lifestyle and purchasing decisions may affect which companies and sectors outperform in coming years. Here are three trends that have potential investing impact.

1. Living with Parents for Now

Mom and dad are more than likely to be a millennial’s roommate. According to a Pew Research Center report, more 18- to 35-year-olds are living with their parents longer than any other generation, even as the economy improves. In Pew’s 2015 study, 26% of millennials lived with their folks, versus 22% in 2007. High student debt may be a reason, as the New York Federal Reserve noted in 2013 that nearly 45% of 25-year-olds had student debt.

Millennials carrying student debt

FIGURE 1: 25-YEAR-OLDS WITH STUDENT DEBT AS OF 2013.

Millennials carrying student debt climbed from 2004 to 2013. Chart source: Federal Reserve Bank of New York. Data source: Federal Reserve Bank of New York, Equifax. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

But there are signs that may be changing. The National Association of Realtors "Home Buyer and Seller Generational Trends" report released in March showed that 35% of home buyers were 35 years old and younger. That was the largest generational group of home buyers, with a median age of 30.

That’s good news for the housing sector as a whole. Home builders stand to benefit, as do companies that sell housing goods like furnishings, appliances, and home improvement.

2. Technology-Savvy and Connected

As the first generation to grow up with digital technology, millennials are comfortable with all online activities, which is seen most notably in retail. With data at their fingertips, millennials find it easy to compare prices for goods—and to buy those goods online. According to Google research, 71% of in-store shoppers use smartphones for online research.

Brick-and-mortar stores shouldn’t worry about this trend, as they seek brands that offer maximum convenience at the lowest cost. In the retail sector, companies that offer “omni-channel” purchasing—different ways to buy goods—are seeing that benefit and are competing with online-only retailers. A 2015 study by IDC showed that shoppers who can buy goods using different methods have a 30% higher lifetime value than those who shop using only one method.

3. Focusing on Health and Wellness

Eating healthy and getting exercise are top priorities for millennials. Technology is helping in that arena, too, providing devices that track everything from calories and portion sizes to heart rate and miles covered. Many of these are apps that can be loaded to a smartphone, but wearable technology is a big part of the trend.

As part of millennials’ focus on healthy eating, a Nielsen Global Health & Wellness Survey from 2015 reported the generation is more willing to pay a premium for foods that promote good health or are environmentally or socially conscious.

Sectors that focus on athletic wear and companies devoted to producing healthy food with a strong social message may benefit from this trend.

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