Millennials use tech for investing
Mountain View, Calif. – — It’s the Facebookification of investing.
From social networking platforms that let young investors follow each other’s stock-picking mojo, to websites for first-timers hungry for a piece of the Silicon Valley venture capital pie, to mobile apps that let 20-somethings find hip financial planners, the millennial generation is embracing new tech tools to put their newfound wealth to work.
And while some experts worry that tech-obsessed newbies will repeat their elders’ mistakes by following the virtual stock-picking herd, many others believe the furious pace of innovation in financial technology will fundamentally change the way this new generation of investors tries to make its money grow.
Instead of getting that hot stock tip from a friend on the golf course, then pondering and eventually calling a broker to buy shares the old-fashioned way, they can with a few clicks of a smartphone app instantly bring up a company’s financial numbers and analysts’ reports, as well as advice from a sprawling network of fellow investors. And a recent study showed that millennials — a group defined as people reaching adulthood around the year 2000 — prefer using online tools to do their investing more than other age groups.
“A lot of people my age are hesitant about jumping into the markets just a few years after the recession,” said Greg Thomas, 27, who works in accounting. “But more and more of us are using social media tools to swap tips, and it’s nice to learn together. It almost feels like a classroom where you can share ideas with people your own age and together see what works and what doesn’t.”
Thomas’ go-to guide is called Tip’d Off. The Bay Area social networking startup’s website and soon-to-launch mobile app describes its platform as a place where investors of all levels of experience can gather to share tips and information, show off their own brokerage portfolios, and maybe even mimic those who seem to have a knack for picking winners.
CTO Ankush “Koosh” Saxena, who at 25 has already earned a master’s degree in electrical engineering, interned at Stanford’s linear accelerator and worked full time at Lockheed, said Tip’d Off brings a sense of ease and transparency to millennials whose trust was shaken by the financial excesses and failings that spawned the Great Recession.
“We saw that millennials tended to be overly conservative,” he said, “so we wanted to give them a tool to learn more about investing over a medium they were already comfortable with.”
That “comfort,” say the founders of Tip’d Off, comes from letting novice investors use a platform they’re well-acquainted with — social networking — to follow other seasoned investors as they make real-time trades and to essentially measure the success of their strategies.
Not everyone embraces the new approach. Alan Moore, a 27-year-old certified financial planner whose clients are often in his own age group, said a little caution is prudent.
“Going into and out of stocks because you’re just following other young investors can kill your returns and cost you a ton in fees and taxes,” he said.
“Tech has its place, but we need to keep the gamification away from investing,” said Moore, referring to the use of game-playing elements, like scoring and rewards, to online activities like stock-picking. “Everyone wants investing to be exciting, but my job is to make it as boring as I can, and that’s a hard concept to get through to people, especially young people in a place like Silicon Valley, where they’re moving from one high-risk venture to another.”
Still, the appetite for these technologies seems to be voracious, as more and more young people decide to jump into the investment game. Despite any post-recessionary hesitancy that Thomas and others may see in their fellow millennials, a recent survey by BlackRock revealed that younger Americans are substantially more confident about their financial future (66 percent positive) than other age groups, with less than half of baby boomers (45 percent) expressing similar a confidence level.
“Overall,” said the study’s report, “millennials are the most confident age group in the U.S.”