The richest generation in history? Why those born from 1981 to 1996 can make a significant profit in the next 20 years

Millennials could potentially become the wealthiest generation ever, according to estate agent Knight Frank's 2024 Wealth Report.

Broadly defined as those born between 1981 and 1996, Millennials, also known as Generation Y, could see a significant windfall in the next 20 years, thanks to property and other assets accumulated by their parents. and their grandparents. This could amount to around 90 trillion dollars (83.1 trillion euros) in the US alone.

"When the silent generation (born 1925 to 1945), baby boomers (1946 to 1964) and the older generation X (1965 to 1979) die, £2.5 trillion (€2.9 trillion) of wealth tied up in homes will be released," the report said, according to Yahoo Finance.

Liam Bailey, global head of research at Knight Frank, believes that the flow of wealth to the younger generation is likely to go a long way to help boost sustainable investment and consciously reduce our carbon footprint.

"Millennials seem to have gotten the message when it comes to reducing consumption – 80% of men and 79% of women surveyed say they are trying to reduce their carbon footprint," Bailey said, as reported by the Guardian.

Could an inheritance be enough to cushion the ongoing economic shocks?

Although the inheritance is likely to add a penny to the finances, the actual reality is much grimmer. Millennials are already reeling under a series of shocks such as Brexit, the pandemic, the cost of living crisis, the Russia-Ukraine war and the resulting energy crisis. More recently, the Israel-Hamas war and the Red Sea attacks have also contributed to increased economic and geopolitical uncertainty.

Some of the above factors have also led to rising inflation, with UK inflation hitting a 41-year high of 11.1% in October 2022. Although it has fallen sharply since then, reaching 4% in January 2024, it is still twice the Bank of England's target of 2%.

In turn, this has led to higher interest rates as the Bank of England tries to get inflation back under control. Mortgage rates have also risen. The price of property has caused many Millennials to say they cannot afford to buy a home right now.

The cost-of-living crisis has also contributed to some millennials saying they're living month-to-month on their paychecks and can't afford to contribute much to savings accounts or retirement pots. This contrasts with the stereotypical image of average Millennials spending their money on expensive coffee and other luxuries.

According to the Resolute Foundation's 2023 intergenerational audit report: "Millennials born in the late 1980s earned an average of 8% less at age 30 than their Gen X counterparts when they were the same age."

Millennials are more optimistic about income growth

It's not all doom and gloom, however, with Knight Frank's Next Generation Survey pointing out that 75% of male millennial high net worth individuals (HNWI) expected their wealth to increase in the next 12 months.

When it came to women, 64% of female millennial HNWIs expected the same. This figure increased to 81% of women when it came to the next generation, Gen Z, where half of them indicated that they expected "significant growth".

This is likely due to some investors feeling that the central bank's policies to curb inflation have worked quite well so far, with the disinflation process accelerating in recent months. The prospect of interest rate cuts by several major central banks sometime this year have also contributed to positive sentiment.

Despite some economic shocks, some stocks, especially US stocks, have also performed well. Artificial intelligence companies have been some of the most successful, generating significant interest, with companies such as Nvidia doing particularly well, as well as US "magnificent seven" stocks in general.

Bailey said: “The improving interest rate outlook, the strong performance of the US economy and a sharp rise in capital markets helped create wealth globally. At the end of 2023, there were 4.2% more ultra-high-net-worth individuals (UNHWIs) than the year before, with nearly 70 ultra-wealthy investors added each day, bringing the global total to just over 626,619 .”

According to the Wealth Report, this trend is expected to continue, with the number of wealthy people worldwide expected to grow by around 28.1% by 2028. Malaysia is expected to see 35% growth, with Indonesia 34%, India 50% and the mainland Chinese 47%. However, globally, this is still less than the 44% growth seen in the five years to 2023.

Millennials are also more optimistic about further increases in home prices, which could cause their property and real estate investment values ??to rise significantly after inheriting them from previous generations.