The sooner you start investing, the better off you’ll be financially. This is something we all know, but often it seems much easier said than done.
A recent survey by Club Financial Services, conducted in Victoria, South Australia, New South Wales and Queensland, found that 35 per cent of respondents aged 18 to 29 and 44 per cent of all respondents under the age of 40 have already started an investment portfolio.
BY VANESSA DE GROOT
This was in significant contrast to the results of respondents aged over 40 years of age, of which just 13 per cent had started their investment portfolio by the age of 30.
Just under 80 per cent of survey respondents indicated that they purchased their first home before they were 30 and the results also show that the younger generation made the purchase of a first home earlier in life.
According to general manager of Club Financial Services Andrew Clouston, the results suggest that the younger generation are a financially savvy bunch, given their inclination to not only buy their first home younger but also having the confidence to enter the investment market at an early age.
Recent first homebuyer grants have probably contributed to younger people being able to get into the property market and many have also stayed at home till their 20s, enabling them to save a deposit to buy their own home.
According to the survey results, young people are focused on using property to build wealth for the near-term future – given that it’s a source of cash flow as well as an appreciating asset – rather than using property to fund their retirement.
While the survey clearly demonstrates that the younger generation are a financially aware bunch, Clouston advises people in their 20s to identify their financial goals to make sure they’re making decisions now that put them in a strong financial position in the future.
He says short-term goals – for five years or less – could include a wedding, honeymoon, furniture, a new car or an investment property. Meanwhile, medium-term goals could include owning a home and financing children’s educations, and long-term goals may include retirement and travel.
While the younger generation seems to be quite financially savvy, I think there’s still a need to create more awareness among youngsters, drilling it into them from an early age that there’s a need to set yourself up financially so you’re not struggling later in life.
I think many people learn about the merits of investing through their family life – often their parents are investors themselves and encourage their children to do the same, as soon as they’re capable of doing so.
But equally there are a lot of people out there who would never have been taught to be careful with their money and use it wisely. I think it should be a compulsory part of our children’s primary and high school educations to learn about different types of investing; it should be introduced into the school curriculum. By doing that, children will have the right mindset early on.
Do you think our younger generations are becoming more financially savvy? Do we need to educate our children from an early age about the merits of investing?