Investment survey reveals Gen Ys cashed up; Xers going for growth; and Boomers remain cautious!
Sydney: August 18, 2009
Gen Y investors are the most cashed up, and remain most hopeful of all the generational investor groups about earning double-digit returns despite wanting to take less risk, an annual DIY investor survey has found.
The research, conducted in May this year by Celsius Research for online banking service RaboPlus, surveyed 503 DIY investors across the four demographics - Gen Y (aged 18-29 years), Gen X (aged 30-44 years), Baby Boomers (aged 45-65 years) and Retirees.
All those surveyed had portfolios of $150,000 or more, which included, superannuation and savings, but excluded the family home - and all actively managed their own investments.
RaboPlus Investments Manager Tim Hewson said: "The research clearly shows a significant pull-back in investor attitude to risk compared to last year's findings by all investors in their exposure to growth assets, especially investment property.
"But if given an additional $500,000 to invest, investment property would still be the preferred investment for all generations."
DIY investors aged 45 years and under were less inclined to invest in superannuation, with interest in allocating to Self Managed Super Funds (SMSFs) also suffering, Mr Hewson said.
While increasing their allocation to cash over the past year (from 22 per cent to 35 per cent), Gen Y investors still believe they can get returns of 13.5 per cent pa from their investment portfolio (down slightly from 14.1 per cent in 2008).
At the same time, Gen Y investors have also lowered their exposure to investment property from 24 per cent to 17 per cent and shares exposure by two per cent down to 14 per cent.
"Last year, Gen Ys told us they were invested across all asset classes, and actively sought high risk adjusted returns," Mr Hewson said.
"Now, they're focusing in on fewer asset classes, condensing their portfolios and reducing diversification, and aren't looking for short term gains (down by 20 per cent from 37 per cent to 17 per cent). Their attitude to risk, even if they feel there may be an opportunity for a high return, has also noticeably shifted".
Gen X investors also expect lower returns (9.5 per cent versus 13.2 per cent returns pa in 2008), but are more likely to consider shares, managed funds, and bonds, he said.
Gen Y investors reported feeling less enjoyment about the investing process, and have become as cautious as the Boomers, who have become significantly more conservative and risk-averse (36 per cent of respondents in 2009 versus 24 per cent in 2008).
Baby Boomers are more likely to consider superannuation in the next 12 months, and Gen Xs are more likely to consider managed funds and shares, compared to the other generations. This year, 54 per cent of Boomers are considering putting more money into superannuation, substantially higher than Gen X (46 per cent) and Gen Y (26 per cent). They are also the least likely group to invest in property (only 29 per cent would consider it).
The research shows that the older you are, the more realistic you've become about returns and the importance of building a suitable long-term investment portfolio.
Gen X, Baby Boomers and Retirees all have lower return expectations since the 2008 research, compared to Gen Y. 41 per cent of Gen Y investors and 38 per cent of Gen X investors have made changes to their portfolio allocations since 2008, compared to only 32 per cent of Boomers.
Gen X investors have increased their allocation to cash by 25 per cent up to 20 per cent in 2009 from 16 per cent last year. Their allocation to investment property was reduced by seven per cent, but they increased their exposure to shares by three per cent to 20 per cent from 17 per cent in 2008.
Boomers return expectations dropped from 11.6 per cent to 9.1 per cent.
Retirees made fewer changes to their portfolio, and also had lower return expectations: 9.4 per cent in 2009, compared with 10.1 per cent in 2008.
