Locked out of property market, more Gen Zers and Millennials turn to investing, HSBC says

Highlights:

• Younger generations are exploring crypto and other assets to build wealth
• Australians are hesitant and unsure about diversifying their investment portfolios
• YouTube leads social media platforms for those seeking investment information
• Most Australian investors still rely on financial advisors for insights and guidance

As rising property prices put homeownership out of reach for many Australians, a growing number of Gen Z and Millennial investors are exploring alternative investment opportunities, as outlined in HSBC’s latest Investors Insights Survey. 

The research revealed almost half (49%) of all investors are either hesitant or unsure about diversifying their portfolios in the coming months, raising alarms about the potential risks of sticking to familiar investment paths. Uncertainty around investment diversification grew (+7%) year-over-year among Australians in 2024. 

While many Australians (65%) have adjusted their investment strategies recently, the number of those making changes has also declined year-over-year. Of those who did adapt, about one-third (32%) are leaning toward a balanced investment philosophy, highlighting a cautious approach amidst shifting market conditions.

The survey also found that, on average, Australian investors estimate the minimum amount required to start investing is $13,251, a noticeable decrease from $15,245 in 2023.

Interest in investing outside of Australia is also waning, with fewer (40%) respondents likely to consider offshore opportunities than in previous years (43% in 2023 and 48% in 2022). 

YouTube (12%) leads social media platforms for investment information, followed by Instagram (9%), Facebook (8%), and TikTok (5%).

Additionally, the vast majority (80%) of investors admit to seeking out investment insights and assistance, primarily relying on financial advisers for guidance.

Generational shifts in investing habits

The research shines a light on the different investment habits of Australians across generations, illustrating that younger people are much more willing to take risks compared to their older counterparts. Gen Z and Millennials are exploring more trendy and volatile products, with a large proportion of Gen Z (39%) and Millennials (36%) investing in cryptocurrency and NFTs.

When it comes to where they want to put their money, younger Australians are excited about tech, with many Gen Z (44%) and Millennials (46%) considering investing in this industry over the next six months. In contrast, older generations are leaning more towards financials, with only modest proportions of Gen X (29%) and Baby Boomers (37%) mulling tech investments.

Gen Z (24%) and Millennials (21%) are also putting more of their monthly income into investments. That’s a big jump compared to just Gen X (9%) and Baby Boomers (7.6%). Plus, younger investors are far more active - with over half of Gen Z (54%) and Millennials (55%) investing on a weekly or monthly basis, while only a small proportion of Gen X (22%) and Baby Boomers (7%) doing the same.

“Gen Z are quite financially active and willing to take on more risk when investing,” HSBC Australia senior manager, investments David Talbot said. 

“Given this generation is facing challenges accessing the housing market, they are taking it upon themselves to build wealth through methods more accessible to them, and allocating more of their income to do so.”

However, he warned that, “Younger Australians should be cautious about volatile investment products and consider building a diversified portfolio for long term wealth generation.”

When it came to investment among different types of assets, the ASX Australian Investor Study 2023 found that Australian shares continue to be the most popular, although exchange-traded funds (ETFs) have risen in popularity (+5%) in the past three years.

That same survey found a notable number of investors aged 18 to 24 began investing during the pandemic. Among all age groups, this next generation of investors exhibited the lowest level of diversification, with an average of three products held. Their lack of diversification is likely due to their relatively short time in the market and their minimal starting incomes.

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