What is the ASX Investor Study?
Every few years the ASX conducts a survey into Australian investors. The survey is a deep dive into what investors are trading, why they are investing, the size of their portfolios and even their views on financial advice. In the 2020 survey, investors were categorised into three different life stages: retirees, wealth accumulators and next generation investors. An interesting trend among next generation investors (aged between 18-24) is how they are moving away from traditional investment assets to new and unconventional ones.
ETFs Vs. Shares
Shares are the most popular investment among Australians, with 58% of us owning them. However, according to the study 18-24 year olds are the least likely group to hold direct Australian shares (36% compared to 77% of retirees), but they are the group most likely to hold ETFs (20% compared to 7%).
The popularity of Exchange Traded Funds seems to be growing and driven by the young investors. According to Betashares in 2020 the ETF industry grew by more than 50%, reaching an all time high of $95.2B, and 38 new funds were made available.
Why invest in ETFs?
Given that young people are more likely to have a smaller amount of capital to invest with, a low-cost investment option such as ETFs could be appealing. ETFs can also provide diversification from a single investment. And with the variety of ETFs on offer, you can either narrow your investment to one specific market sector or spread your investment broadly, from international shares to bonds to commodities. Just like shares, ETFs are sold on the stock market and they are easy to access.
Related article: Pros and cons of Exchange Traded Funds
The table below displays some of the International Broad Based ETFs available on Canstar’s database with the highest three-year returns (sorted highest to lowest by three-year returns and then alphabetically by provider name). Use Canstar’s ETF comparison selector to view a wider range of products. Canstar may earn a fee for referrals.
Residential Investment Properties Vs. REITS
Investment properties were the second most common asset held by Australian investors, with 38% of us owning them. However, young people are finding it increasingly hard to access the property market. Cities like Sydney and Melbourne are notoriously expensive and investment properties are not a low-cost investment option, given the initial deposit needed, and insurance and maintenance costs. An alternative that young investors are turning to are Real Estates Investment Trusts (REITs), or A-REITs as they are known locally.
Why invest in REITs?
REITs are a pooled investment fund that typically invests in commercial properties such as offices and apartment buildings, shopping centres and hotels. Probably the most appealing aspect of investing in REITs is the ability to gain exposure to the property market for as little as $500, in some cases. REITs are also bought and sold on the ASX, making them easy to access.
If you’re comparing online share trading companies, the comparison table below displays some of the companies available on Canstar’s database with links to providers’ websites. The information displayed is based on an average of six trades per month. Please note the table is sorted by Star Rating (highest to lowest), followed by provider name (alphabetical). Use Canstar’s Online Share Trading comparison selector to view a wider range of online share trading companies.
Term Deposits vs. Futures?
Despite the record-low interest rates, a whopping 44% of retirees are invested in term deposits and 21% of new generations investors have them too. Although, if you are a new generation investor you are less likely to invest in a term deposit. However, this cannot be said of futures. While only 2% of Australians invest in the futures market, 6% of new generation investors hold them.
Why invest in Futures?
A futures contract is a legally binding agreement between a buyer and a seller to buy an underlying asset at an agreed time in the future. Futures are typically considered a complex and risky investment, which are used by investors to hedge against price drops.
Where you are in life can significantly impact the investment decisions you make. After all, those nearing retirement will have different priorities, goals, attitudes and means to invest compared to those who are younger and in the early stages of their career. New generation investors have time in the market on their side, therefore, they generally have time to ride out any volatility. This may make young investors more comfortable investing in the riskier futures market over the less risky term deposit.
Cover image: Yan Lev (Shutterstock)
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