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Being financially secure is an important life goal for most people. However, only about half of Millennials reportedly consider themselves to fit into this category.
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To achieve that elusive financial security, many people turn to investing. This is especially true for Millennials, who are more likely than other generations to invest in stocks, bonds, mutual funds, and exchange-traded funds (ETFs). So, millennials looking to improve their portfolios and achieve financial independence should consider what role banking services can play in managing these investments.
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4 ways millennials can use banking services to strengthen their portfolios
Millennials are entering their working years and have already established many of their financial habits and beliefs. But there’s always room for improvement, and many Millennials have overlooked the banking resources they can use right away to build a better investment portfolio.
Here are four ways Millennials can take advantage of these services and optimize their investment approach. Many of the key findings come from a YouGov survey of more than 400,000 Americans on financial attitudes and behavior.
1. Reduce risk with personalized banking services
Millennials are more open to taking risks with their money than older generations. In fact, 46% of Millennials “don’t mind taking risks” with their money, compared to just 28% of Gen Xers and 16% of Baby Boomers.
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While risky investments can sometimes pay off, building a balanced portfolio is the best way to avoid losing all your savings due to unpredictable markets. Personalized banking can help reduce this risk with services such as:
Automatic advice based on risk tolerance with robo-advisor
Investment tools tailored to your personal goals
Financial education resources to manage debt and increase savings
Improved digital experience for tracking and managing investments
2. Hear from experts
Millennials are more willing to accept advice from experts than other generations. 41% said they consulted a professional before making a financial decision. That’s about twice as many Gen Xers and baby boomers who rely on financial advice. Additionally, approximately 25% of Millennials currently work with a financial advisor for investment products and services.
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However, this is still a minority generation. More millennials should recognize the role that banking services can play in guiding better investment strategies. A financial advisor can create a personalized investment plan tailored to your financial situation and risk tolerance.
3. Take advantage of different investment options
Millennials see real estate as an investment with the greatest opportunity for growth. However, they also tend to invest heavily in common financial products such as stocks, corporate bonds, mutual funds, and ETFs. On average, Millennials are more likely to invest in these financial products than any other generation.
Millennials have more access to banking services and more diverse investment opportunities. For example, many banks offer services such as:
Fractional investing allows you to invest in assets such as real estate or high-value stocks without purchasing full ownership.
Alternative assets that may not have been previously accessible to mainstream investors, such as digital assets and private equity.
4. Align your portfolio with your values
One recent study found that 63% of Millennials believe they have a “responsibility to help solve social problems through investing.” This belief has led to a growing interest in environmental, social and governance investment funds, with 73% of Millennials claiming they would be more likely to invest in a “fund with a better carbon footprint.”
Recognizing Millennial investment trends, banking services are beginning to align with these perspectives. Many banks currently offer the following services:
Socially responsible investment options that allow you to invest in companies that share your ethical principles.
Opportunities for high-impact investments aimed at generating social benefits as well as economic growth, such as expanding renewable energy and affordable housing projects.
Increased reporting transparency allows you to analyze how your customers’ investments are generating real-world outcomes beyond financial returns.
final thoughts
Millennials tend to be optimistic about their financial situation, with 47% believing their financial situation will get better over the next year, compared to just 14% who think it will get worse.
Millennials can translate this positive thinking into a measurable impact on their investment portfolios by making the most of the banking services available to them.
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This article originally appeared on GOBankingRates.com: How Millennials Can Use Banking Services to Enhance Their Investment Portfolio
