Spending £5,000 on a piece of jewellery is a concept almost unimaginable to your average Millennial, but if you go back just two decades it was quite common for that amount to be spent on a beautiful piece which would be regarded as an investment. Today you are likely to find fewer Millennials investing in jewellery.
Insure4Retirement, a Home and Travel Insurance provider for the over 50s found that 73% of people who completed a quote and listed jewellery listed jewellery such as diamond engagement rings as part of the cover required, owned over £5,000 worth of gems and precious metals.
Data from the Wealth and Assets Survey 2016 (WAS) shows that households with, what the insurance industry refers to as the largest ‘physical wealth’ were people who had reached retirement age, having accumulated more than £66,900 in household assets.
Not surprisingly, however, the WAS survey shows that those in the 16-24 age group, have the lowest ‘physical wealth’. You could argue that the younger generation’s lack of physical wealth is simply because they haven’t had enough time to accumulate physical assets.
This is partly true, as the average age people are now getting on the property ladder is over 30 years old, seven years older than the average in 1960.
A quick look at my friend and family bears this out. I have nieces and a nephew in their 20’s for whom owning their own home seems a pipe-dream. The Husband and I joke that Caitlin and Ieuan are likely to be living with us until their 30’s.
I, on the other hand, was lucky enough to buy my first flat in the 1990’s, partially funded by a deposit from the ‘Bank of Mum & Dad’ but paid for and maintained by my lowly secretarial job. How times have changed.
Simply put, Millennials don’t have homes filled with stuff, because they don’t yet own homes to fill with stuff. Material things seem to hold less attraction than the opportunity to explore the world.
Despite this being a contributing factor to the huge gap in physical wealth between the younger and older generations, industry analysts say that it’s largely down to the fact that Millennials simply don’t see value in spending their cash on valuables.
“Millennials gravitate toward spending money on experiences, and not things” according to Sarah Berger of TheCashlorette.com Today’s younger generation are far more inclined to spend a significant amount of money travelling to locations such as Bali and Thailand – both popular destinations for under-30 Brits – than on fine jewellery.
The move toward spending a higher percentage of income on experiences isn’t isolated to the younger generation according to the Office for National Statistics.
The ONS highlighted that households aged between 65 and 74 are now spending nearly a fifth (18%) of their income on recreational and cultural activities.
Perhaps fuelled by the recent availability of reasonable travel insurance for older people with medical conditions. Over 65s are spending the highest percentage of their income on package holidays than they have in a long time.
This really isn’t surprising since we are an ageing society and, according to Age UK, nearly one in four people in the UK (24.2%) will be aged 65 or over by 2040. The landscape is changing rapidly when it comes to our perception of ageing and how we should be spending our time.
As the rising cost of living eats into the wallets of UK households, the jewellery and retail industry are competing unsuccessfully for the attention of our young generation.
The generation currently aged 18-36 typically spend around 30% of their income on rent, in comparison to the 10% their grandparents would have spent in the 1960s. Leaving them with less to splash out on luxury possessions as they opt for Instagram-worthy brunch spots in lieu.
In addition, the number one trigger for buying diamonds – marriage – seems to be on the wane.
The Independent recently reported that, according to official figures, marriages between men and women in England and Wales have fallen a record low.
There were 239,020 marriages between opposite-sex couples in 2015, the latest year that figures are available for, a drop by more than 8,300 or a decrease of 3.4 per cent from the previous year. Full data is not yet available for same-sex marriages.
The diamond industry has reportedly slowed as our Millennial consumers are far-less enamoured by traditional diamond jewellery than their parents. “Diamond jewellery appears to be low on the buying lists” of today’s youth according to Des Kilalea, an analyst from RBD Capital Market.
A worrying situation for the jewellery industry, as the Millennial generation edge towards becoming the most active consumer group.
According to Insure4Retirement, whose customer base is predominantly made up of baby-boomers, 50% of all specified items of jewellery are diamond.
If the jewellery industry can’t find a way to grip the hearts of our youth, we can expect to see these figures decrease with each decade, until the once much-coveted diamond becomes yet another icon of a bygone era. Without Millennials investing in jewellery, the industry will definitely lose its sparkle and the retirement portfolios will continue to change.
The opinions and views expressed above are those of the author only and are for guidance purposes only.