December 3, 2022
  • December 3, 2022

What should millennials invest in – stocks or cryptocurrency?

By on May 17, 2022 0

What should millennials invest in – stocks or cryptocurrency? (PHOTO: Getty Commercial)

SINGAPORE — Stocks may be the best-known and easiest type of investment, but cryptocurrency also seems to be the next big thing in recent years. So what should millennials choose to invest in – stocks or cryptocurrencies? And is there a better option?

This is part of a series where Yahoo Finance Singapore will focus on different aspects of millennials and their finances. In this first part, we find out whether it is better for millennials to invest in stocks or cryptocurrency.

Diversification as a baseline

First, it’s important to know what you’re getting into. Investing in stocks can include a variety of investment instruments such as exchange-traded funds, index funds, government bonds, futures, warrants, and commodity trading. They are usually made by investing a small amount of money each month.

Meanwhile, cryptocurrencies are digital assets that people can use as investments or for online purchases. It basically works by exchanging real currency to buy “coins” or “tokens” of some type of cryptocurrency.

Therefore, the short answer to whether stocks or cryptocurrency are a better investment is that it depends on your financial needs and desires. In fact, the financial experts who Yahoo Finance Singapore spoke to advised that millennials should actually invest in both stocks and cryptocurrency.

“Ultimately, your financial portfolio should be diversified and you can always choose to invest in both stocks and crypto, as they perform different functions,” said Catherine Seah, 22, a student financial adviser. .

Echoing a similar tune, Asheesh Chanda, CEO of Kristal.AI, a leading digital private wealth platform in Singapore, said, “Investment should be seen as a variety of modes of transport for people to reach their Goals. Each mode offers certain advantages and entails certain costs. »

For example, if you can only afford to invest a small amount each month, investing in stocks is the way to go as it is inexpensive and an effective way to access the markets. Otherwise, if you take more risk, cryptocurrency might be a better option for long-term gain.

Stocks as the safest option?

Yet, it seems most millennials are still leaning towards investing in stocks without getting too into cryptocurrency.

According to brokerage firm Tiger Brokers, 45% of their Gen Z investors prefer long-term stocks like Apple, Boeing and Carnival. Other data from an OCBC Financial Wellbeing Survey also reveals that around four in ten millennials who invest admitted to having speculated excessively in the hope of making a quick buck.

For example, 28-year-old marketer Gideon Lai has been investing in stocks for the past two years after thinking about how to make more money and get the most out of his money.

However, he also cautions: “It’s one thing to see your yields grow, but it’s another to be greedy. I think it’s important to strike a balance, especially if you don’t really have strong financial knowledge.

Similarly, Colette Low, 22, an undergraduate student at a private university, decided to get into stock investing because she sees it as a “good long-term investment.” Low, who has invested around S$5,000 a year since she was 19, added that she makes most of her financial decisions after reading about them online via social media.

“I think equities are already seen as a less risky option because they don’t require a lot of financial commitment. It also helps that it’s easy to buy and we can take advantage of it whenever the economy grows,” Low said.

As a rough guide, experts don’t recommend young investors bet their big life goals on investments only and keep them to less than 5% of their financial portfolio.

“At least some of the potential return on stocks is speculative, and at a minimum, there’s just too much uncertainty. I recommend focusing on bigger financial goals, like planning a home, because those are trusted and proven stuff,” said Chuin Ting Weber, CEO of MoneyOwl, a bionic financial advisor.

Cryptocurrency the future?

Despite this, it seems that cryptocurrency is also making waves globally as a possible investment option for young people. According to a June 2021 Bankrate survey, millennials (aged 25-40) expressed the most comfort of any age group with cryptocurrency, with 49% feeling comfortable enough to invest in crypto assets such as Bitcoin.

In fact, other survey data from financial site Capitalize found that 54% of millennials say they intend to include cryptocurrency as part of their retirement strategy.

Fresh graduate Reuben Tay, 25, is one of those as he believes cryptocurrency is the way of the future as cryptocurrency technology relies on security that can allow users and owners to remain private and anonymous during transactions.

“I think cryptocurrency enables greater digital access and ownership. Even people who don’t have access to traditional banks can get into the financial system using cryptocurrency,” Tay said. .

And although it’s a high-risk bet where there’s a good chance you’ll lose all your money, Tay thinks the payoff is worth it as long as you know what you’re doing.

“It’s important before investing in bitcoin or other cryptocurrencies to go in with your eyes open and always check to make sure you don’t fall for a scam or false promises of returns. high,” Tay said.

In fact, with the rise of the cryptocurrency industry, it seems companies are jumping on the bandwagon to make people more familiar with cryptocurrency payments.

For example, local ride-sharing company Ryde will accept crypto payments via Bitcoin starting in the third quarter of 2022. Ryde users will have the option to choose from a growing list of over 70 currencies and 10 blockchain networks to pay.

“We want to deploy non-fungible tokens in a way that generates more real global value, especially for the rapidly growing market segment of Singaporeans who hold crypto,” says Terence Zou, Founder and CEO of Ryde.