How Millennials Are Changing Stock Investing The thrifty nature of the nation's largest generation is attracting the attention of Wall Street.

There are differing opinions on what defines a millennial (though they are generally considered to have been born between the very early 1980s and late 1990s), but with numbers totaling approximately 72 million, this cohort has become the most populus living adult generation in America. Thus, Wall Street pays attention to their immense purchasing power and investing behaviors.

According to a 2018 survey by CFA Institute, millennials cite, amongst their top money goals, to avoid living paycheck to paycheck and the ability to pay their monthly bills. They are also saving more money than older folks and, part and parcel, don't like paying for costs that undermine one's ability to save and invest. Here's how this age group is changing the $35 trillion U.S. stock market.

Low commissions on trading

To trim expenses, 44% of millennials cook at home; 32% use coupons; and 31% cancel subscriptions, according to a 2017 survey by Discover. Thus, brokerages are reducing or eliminating trading fees to accommodate these investors' preference for low-cost investing.

So, how are investment firms adjusting their operations to accommodate lower fees? "Given that younger consumers are searching online for better deals, large and small brokerages have been slashing stock-trading fees," affirms Steven Woods, founder of New York-based Stirlingshire Investments. And then there's Robinhood, which disrupted discount brokers by eliminating fees.

According to the same 2018 CFA Institute survey, 42% of millennials don't know what type of fee finance professionals charge. But many will know value when they see it.

Zero-commission trades are extremely valuable long-term. These add money to an investors' pocket and can be worth thousands of dollars when compounded over a lifetime. In fact, Warren Buffett advises people to avoid paying commissions as much as possible due to their expensive compounding effect.

Micro investing and fractional ownership

The same Discover survey found 81% of millennials are saving money. That's compared to 74% for Gen Xers (ages 41-55) and 77% for Baby Boomers (ages 56-75). A recent 2020 survey by Bank of America found that 24% of millennials have stashed more than $100,000. Their top three saving motivations are retirement (75%), emergency fund (51%) and travel (42%).

Last year, the S&P 500 gained 31.5%, making stock investing an important strategy for building wealth. And the stock market has democratized over the past decade by becoming more financially inclusive. Thanks to micro-investing and fractional ownership, people of all economic backgrounds can invest for the future if they possess the discipline to save from each paycheck. This method is great for putting extra cash to work instead of letting funds earn a measly 2% at a bank savings account.

For example, micro-investing apps like Acorns and Stash are popular with millennials. When it comes to fractional ownership, Shark Tank star Kevin O'Leary's Beanstox app lets anyone buy and sell securities in small dollar amounts. Students, young professionals and even unemployed workers can still participate in the stock market and diversify a portfolio.

Decentralized finance

Finally, decentralized finance (DeFi) represents the biggest threat to traditional banks and brokerages that don't pivot towards a fast-growing digital asset industry. During the 2008 financial crisis, millennials across America saw their parents weep at dinner tables for losing their job and losing a nest egg due to Wall Street's unethical practices in the mortgage sector.

Bitcoin (BTC) was birthed during last decade's housing crisis. As non-sovereign, borderless money, Bitcoin has risen spectacularly to its current $16,000 valuation. It's also the first and most important decentralized financial instrument, commanding 65% dominance in the $465 billion cryptocurrency market.

Related: Why Small Businesses Should Consider Bitcoin

So what do cryptos have to do with stock investing? First, Fortune 500 companies are beginning to accept Bitcoin as a method of payment. If you believe in the continued rise of cryptocurrencies, this may be a factor in your equity-purchase decisions. Global brands like Visa, PayPal, Starbucks and Microsoft let users transact with bitcoins.

Secondly, Wall Street banks are exploring tokenization to drastically cut trading and remittance costs. While these are centralized coins, DeFi is putting pressure on the equities ecosystem to consider frictionless technologies to gain efficiencies at scale.

Finally, DeFi ventures are offering people high interest rates in exchange for staking their digital coins. Crypto lending can lead to investors earning more than 10% to 15% in annual interest. This gives the younger crowd an alternative to dividend-paying stocks that won't pay nearly as much.

Millennials want to do business with business- and tech-forward companies. These changes will improve the consumer journey, as well as make the U.S. economy more inclusive and efficient.