Young Aussies are turning into patient share investors, not just cryptocurrency enthusiasts
The last few years have seen record house prices, as well as lots of global uncertainty. This has made a lot of young people question and prioritise their finances.
The unaffordability of the housing market has meant many young people are no longer able to save up for a house deposit. Instead, they are turning to market investing, according to Equity Mates.
In a survey of 1,537 responses conducted by the company, young Australians shared insights into their attitudes towards investing and financial market trends.
Of particular interest was the answer young investors gave when asked if they would rather invest $1000 into an individual stock or an ETF- a whopping 68% or two-thirds of respondents said they’d prefer an ETF.
Furthermore, when asked if they’d prefer to invest in a passive ETF or an actively managed fund, 71% of young investors chose a passive ETF.
These are the four key trends that stood out from the data collected: younger investors are just starting out and have limited experience, they are less interested in cryptocurrency, they are seeking expert help, and they have long term goals.
Equity Mates research shows that 78% of respondents aged under 35 have only been investing for three years or an even shorter period. To break that down further, the survey shows that 29% of young people have been at it less than one year, 31% between 1 and 2 years and 18% between 2 and 3 years.
A further finding is that crypto appears to be losing its grip on young investors. With $1,000 to invest, as an example, the report said 92% of young investors would prefer to invest in the share market over cryptocurrency. The survey also asked if these investors how’d they choose between the share market and property. Incredibly, 93% would prefer shares, which might not have been the answer a decade ago.
The Equity Mates report also questioned investors about getting help with their share trading. This query provided a stunning result because just 5% of respondents under 35 receive personal financial advice. This doesn’t mean people aren’t keen on advice, as many as 40% of those who participated in this study said they need personal financial advice.
Lastly, even though there’s speculation in the media that young people are reckless with their investing and maybe in it for the short term, 98% of them are holding in their shares for a longer term period, as per the research. Only a small percentage are very short term investors, by contrast.
The next generation of investors?
All of this research lines up well with other reports on the topic, including a study by RMIT University and Western Sydney University in 2021. It showed that in the 12 months to August of 2021, 435,000 Australians first began to trade on the Australian share market, bringing the total number of active retail investors in Australia to a record high 1.25 million.
Furthermore, the Australian Securities Exchange (ASX) identified the "next generation of investors" as those aged 18 to 24 years and women - the fastest growing demographic groups.
This conclusion from 2021 was made, in part, due to the pandemic lockdown, but also because of new and developing fintech products and platforms, increasing circulation of finance content online, as well as the perceived unaffordability of the property market.
If you’re ready to research share trading, why not check out our guide for Mozo’s best online Share trading platforms in 2022.