The ASX Australian Investor Study 2017 is out, and it has revealed that despite the popular notion of the carefree millennial, young investors are keener on conservative investments than retiree investors are.
According to the report, 81% of young investors want stable or “guaranteed” returns, compared to 60% of retirees.
ASX’s research shows that this may be due to their different investment objectives, with the top three financial goals of young investors being:
- Accumulating wealth
- Saving for a home deposit
- Saving for travel
The report also notes that young people, perhaps due to their tech-saturated upbringings, are more interesting in robo- advice and other innovations.
Additionally, the report found that the amount of Australian investors aged 18-24 has doubled since 2012, hitting 20% this year.
The number of Australian investors aged 25-34 has also increased, going from 24% to 39% in the same period.
The report’s author, John Mahoney, said the findings “challenge existing industry perceptions of investors”.
— ASX (@ASX) May 18, 2017
Australian investors need a better understanding of diversification
The ASX’s study found that not all Australian investors are risk-averse, with 41% of investors over 55 saying they don’t mind some variability in their returns.
However, the data showed that many investors have a poor understanding of diversification.
Despite ASX Managing Director and CEO Dominic Stevens saying that “Australia remains a nation of investors with increasingly diverse portfolios”, the report shows that:
- 46% of investors claim to be diversified, but only hold 2.7 investment products on average
- 40% of investors say they do not have diversified portfolios, and hold 1.6 investment products on average
- 15% of investors don’t know if they’re diversified
- 75% of share owners hold only Australian shares
Mr Mahoney said it’s “increasingly important” to consider portfolio diversification and risk management amid “increasing economic and political uncertainty at home and around the world”.
Are we making use of financial advice?
Another finding of the report was 60% of all Australian investors have obtained some sort of professional advice from a financial planner, full-service stockbroker, accountant, and/or lawyer.
When broken down by generation, the top reason for getting financial advice was consistent across all generations:
- To obtain advice tailored to their personal circumstances.
|Generation||Percentage of people using financial advice||Top 3 reasons for getting financial advice|
|Aged 18-24||37%||1. To obtain advice tailored to their personal circumstances
2. To get investment ideas
3. To help them diversify their portfolios and minimise risk
|Aged 25-29||44%||1. To obtain advice tailored to their personal circumstances
2. To help them diversify their portfolios and minimise risk
3. To gain access to investments they would otherwise not be aware of or able to access
|Aged 60+||52%||1. To obtain advice tailored to their personal circumstances
2. To help them diversify their portfolios
3. To help them navigate the administrative and tax requirements of investing
Mr Mahoney said the findings of investor studies often underline the importance of investors seeking professional advice.
“They sometimes find that investors rely too much on their family and friends and their own research,” he said.
“But our study shows that financial advisers need to be offering the right products and services to suit the market.”