Stock Selection: Millennials Vs Baby Boomers


Trends play a massive role in investing. As the famous saying goes, “ the trend is your friend”. By spotting a trend early, you can analyse what stock selections you need to make to maximize your returns. Conversely, knowledge of a downward trend will help you assess which stocks and markets to get out if. In this article, we look at the US stocks that are held in the portfolios of millennials and boomers as reported by TD Amritrade.

What the Baby Boomers invest in.

Baby boomers are those people born between the years 1946 and 1964. They make up a large chunk of todays population.

Analyzing what stocks Boomers invest in is important because the first of Boomers start retiring around 2017. When people retire, they tend to move from equities to more safer products like bonds. Going by this, you would expect the share values of the stocks baby boomers hold to decrease over the next few years – in theory at least!

The following are the top 10 stocks boomers hold in their portfolios:

  1. Apple 9.0%
  2. General Electric 1.7%
  3. Intel 1.6%
  4. Bank of America 1.6%
  5. Microsoft 1.5%
  6. Facebook 1.4%
  7. AT&T 1.3%
  8. Berkshire Hathaway 1.2%
  9. ExxonMobil 1.2%
  10. Johnson and Johnson 1.0%

In general, the research by TD Ameritrade suggests that baby boomers lean towards stocks of healthcare companies in their wider portfolios.

 

What Millennials invest in.

Millennials or generation Y are those people born between the early 1980’s and the early 2000’s. They are the generation that grew up around technology and tend to be more socially responsible and care more about the environment.

The oldest millennials are about 35 years old and are just about to enter the phase of their lives where they are expected to have the highest earning potential (40years – 50years). So you would expect that the stocks millennials invest in will only increase in popularity over time. Catching this trend early would mean that you will be buying stocks today that could prove to be very popular tomorrow.

The following are the top 10 stocks millennials hold in their portfolios:

  1. Apple 11.4%
  2. Facebook 2.6%
  3. Bank of America 2.0%
  4. Berkshire Hathaway 1.7%
  5. General Electric 1.6%
  6. Alibaba 1.5%
  7. Tesla 1.3%
  8. Microsoft 1.2%
  9. Intel 1.1%
  10. ExxonMobil 1.2%

In general, the research by TD Ameritrade suggests that millennials lean towards stocks of technology focussed companies that are innovation-oriented.

It is also important to note that millennial’s are far more in touch with their personal finance situation than generations before. More and more young people are shunning credit cards for prepaid debit cards.

Millennials are also looking to technology for help with their investments. Platforms like Nutmeg take the hassle away from investing by providing set portfolios for a minimal fee. See my review of Nutmeg here.

 

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