Here's how 10 millennials are investing their money in 2020

"You need to go to school, get a good job, save up, buy a house, save up some more, and eventually retire."

That's what I was fed growing up. There's nothing wrong with that. The stability, security, and predictability of it all just seemed too...boring. I knew there was a smarter way to manage, to grow, my hard-earned money than to leave it in a savings account losing value to inflation. So, I asked 10 friends what they invested in. They ranged from Tier 1 bank employees to AI consultants, from private equity associates to all-out entrepreneurs. To preface, I am not an expert nor a professional investor, and I have no intention to become one. I'm simply sharing what I thought were helpful and interesting perspectives on how people in their 20s invested their money. We will go (roughly) in order from basic to difficult/advanced.

1. Equities and bonds: This is the most classic asset class that came to mind for me, when people referred to the word "investing". Green and red line charts, +/- numbers, and ticker symbols. Low barrier to entry (anyone can set up an account and start buying and selling stocks today), highly liquid (easy to sell), and tons of media coverage (particularly on equities). Due to these characteristics, pretty much everyone I talked to held some amount of equities and bonds. This also includes ETFs (Exchange Traded Funds) which track indexes (e.g., S&P 500). When I asked how much of their portfolio was in this category, the answer varied based on their strategy. In general, people that invested in real estate did not hold too much in stocks and bonds (and vice versa). None from this group were actively day trading (that I know of), so most were buying and holding, based on the knowledge and belief they had about the market or a company. If you're not ready to research or develop a strong point of view on any sector or company, broad ETFs are a great way to participate in the market (growth generally at ~6-12%). There is a variety of online/mobile platforms you can use to buy ETFs (personally I use Wealthsimple).
2. Real estate: Billboards, realtor signs on the front yard, and lots of driving around different neighbourhoods. Here is where you can't exactly get in with $500 (like you could with stocks). Pretty much the opposite of equities, real estate is highly capital intensive, illiquid (selling an asset could be anywhere from weeks to years), and very limited public information about specific assets. About half of the people I talked to own real estate, and all of them swear by it. Now, keep in mind, I'm in Toronto, so if you've owned real estate before 2017, you probably did quite well. In the short (and medium) term, there will always be fluctuations, so please be mindful before plunging into a purchase. Those that owned residential investment properties generally focused on making sure their property is cash flow positive (i.e., rent they collect > cost of owning the house/condo which includes mortgage payments, maintenance, property taxes, etc.) Appreciation is assumed, but never taken for granted (again, reiterating the cyclicality point), so the positive cash flow helps ensure that even in a downturn, you can still service your payments and keep your property. Sounds great, Jeff! How much do I need to get started? That's the thing, it's capital intensive, and many in their 20s may not have $25,000-100,000 casually lying around. The required down payment for a resale property is anywhere from 5-20% of the selling price, and 1BR condo units in Toronto start at around $500,000. An alternative is to buy pre-construction for which often developers will offer incentives to lower entry cost (e.g., 5% around signing, 5% 6 months later, 5% 2 years later, and 5% on occupancy). Although this allows you to enter with lower upfront capital, the property won't generate cash flows for the years of development (2-5 years). You'd have to believe that the appreciation will generate more return than what you could get elsewhere. The beauty of it is 5% growth on $500,000 is a lot more than 5% growth on $25,000, and you're able to access this via leverage (i.e., a mortgage).
3. Small business buyout: This is the stuff that nobody is looking at. No media coverage. No social momentum. Nothing. These are your mom and pop operations that have done well (or maybe not so well), whose owners are looking to hand over the keys or inject capital into the business. You would need to perform an appropriate level of diligence, which can often take months. If you have any sort of full-time job, this is the type of stuff that you would need to carve out time on weekends to pursue. This falls into the category of active investing. Why would anyone put this much effort into what essentially sounds like another job? Well, some of us are workaholics (is that still politically correct in 2020?) Joking aside, there are a couple of reasons to buy out a small business. You may have expertise in the industry. You may find investing in something tangible, that you can manage, rewarding and stimulating. It could also be that because nobody is looking at a particular business (say, a small tax service agency), it's undervalued, and based on the cash flows it consistently generates and the debt terms you can secure, you get to own a cash flow-positive asset (similar to the real estate example above). There are many reasons one could or should buy out a business, but it's certainly not straightforward, not cheap, and requires a lot more work than some of the other investment vehicles available on the market. One of the big intangible benefits you get from pursuing this avenue is operational/life skills that may be less accessible if you're in a service-oriented job (like myself, in professional services).
4. Cannabis: Whether you are a regular consumer of, an active investor in, or have nothing to do with cannabis, it's hard to ignore the subject. With legalization and standardization of cannabis products in Canada, it's starting to feel like the 'stigma' around the topic is subsiding. Naturally, I had to know. "Are you investing in cannabis?" I asked my friends. All, except one, were not. Everyone had their own reasons, but the spectrum ranged from "don't understand it enough" to "over-regulated". Some believed cannabis could have 'legs' in the medicinal context. Others are waiting to see how Fortune 100 food and beverage players like Coca-Cola and Red Bull plan to incorporate cannabis into products. The consensus is that there is huge future opportunity, but now is not yet the right time. Unless you have insider information, this feels like a speculative bet.
5. (BONUS) Sneakers: That's right, people make thousands of dollars buying and selling shoes. But these aren't just any random pairs of Vans or Nike Air Force 1s. No, these are highly anticipated, celebrity-endorsed, often brand-collaborated products released in limited quantities. When asked what the average return is, one 'sneakerhead' replied "It honestly depends on the shoe. Recently, I sold two pairs at $500 profit each, so total of $1,000. Took me 20 minutes of work. I've also been able to flip a few pairs of Yeezy's for good returns. For instance, the Static Black 350 V2 Reflective Yeezy's returned $900+. Overall, I make about $12-20K per year from buying/selling sneakers." A thousand bucks for 20 minutes of work?! Sign me up! But wait, it's not as easy to execute as you think. There are strategies and tools for buying and selling. One strategy for buying is to be part of a 'cook group'. This is a group that provides product release information, exclusive early links, group buys for bots, and bot support. "Manually buying shoes is hard to do today because you can't compete with the speed of bots, but some retailer sites have bot protection, so running both manual and automatic methods is the smart thing to do."

So there you have it, what 10 millennials are investing in today. Am I telling you to invest in the vehicles above? Not necessarily. What is suitable for you to invest in entirely depends on your goals, risk tolerance, information, and beliefs. Personally, I found the conversations enlightening. They helped me realize and appreciate the profound truth that everyone sees the world a little (or a lot) differently, and what they believe shapes where they choose to put their money. Right or wrong, their investment decisions introduce discipline, commitment, and learning.

Disclaimer: All investment strategies and investments involve risk of loss. Nothing contained in this article should be construed as investment advice. Any reference to an investment's past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.