While many young investors may be struggling to crack the property market, they are finding plenty of other innovative ways to invest their money and make good returns.
Gen X and Gen Y are losing interest in property investments and big-name shares, and are instead investing more and more in high-growth sectors offshore including video gaming and driverless cars.
We would love to say that it sounds much cooler to say you have shares in a driverless car company than in a bank, but we absolutely do not advise picking your investments based on what your friends will think of them.
What the numbers say
New figures show that in the 12 months up to January this year, international stock turnover increased 91% for Gen X and 73% for Gen Y.
The data was put together by the National Australia Bank’s investor arm nabtrade. It also revealed that younger Gen Y (young investors) tend to invest more in technology stocks in “innovative fields” compared to older investors.
Nabtrade director of SMSF and investor behaviour Gemma Dale explained that young investors typically put their money into higher growth assets instead of opting for those that showed steadier growth over time.
“Generally, younger generations have longer investment time frames, which allows them to pursue high growth assets, while Baby Boomers are opting for traditional blue chip names which offer reliable yields and have excellent long term track records,” she said in a statement.
Where are young investors putting their money?
Gen X investors had higher shares in Amazon, Tesla, Microsoft and Alphabet, she said, whereas Baby Boomers veered towards Apple and Facebook, in addition to more established firms like Wells Fargo, Lloyds and Berkshire Hathaway.
Gen Y, meanwhile, were opting for shares in innovative technology companies including Advanced Micro Devices, Nvidia and Activision Blizzard, commented Ms Dale.
Bond University investment expert Dr Simone Kelly said she was unsurprised by the riskier, high-growth strategy shown by younger investors.
“It’s pretty straightforward when you look at the risk-return spectrum,” she said.
“Younger people are much more risk-seeking because they have a longer time to recover and are starting off with a smaller amount to invest. They’re looking to accelerate and lever that as much as they can, and it’s not such a great loss if they lose their capital — they can take that risk exposure.”
Dr Kelly added that one reason why young Aussies are turning to these innovative investment options is because they face so many barriers to investing in property. They also have greater awareness of high-growth tech companies, so are less wary of investing in them.
Makes sense to us. If you’re confused about your investment options or want to understand more about the risks involved with certain types of investment, just get in touch with our team. We’d be happy to discuss investments all day long, and not in a way that will send you to sleep.