Oct 18, 2024  | Tags: Investment, strategy, risk

Our insights

Generational differences are there for all to see.

Be it fashion, music or lingo, change is ever present.

And so too it applies with each generation’s approach and attitudes towards investing.

New times come with new opportunities and they are often ones older generations view not just with scepticism but sometimes even ridicule, often brought about by a lack of understanding.

Gen Z especially has been forced to think more laterally because some of the traditional investment options available to Boomers and Gen X are no longer within their scope.

With youth comes bravery, even daredevil, that has long since evaporated or probably never existed in the Boomer.

But an analysis of the generational differences in preferred investment strategies and temperament should be a lesson for all.

It underlines that there are paths to successfully invest whatever the time, the technological advancements, access to information or prevailing economic winds.

As you view the different generational skews in investing that follow, look to identify how in line you are with your generational pattern, identify any blindspots that might exist and also any opportunities that you might be missing.

Baby Boomers (Born 1946-1964)

Risk tolerance: Low

Preferred assets: Property, term deposits

The youngest baby boomer turns 60 this year.

Many were children of Europeans who arrived in Australia following the post-war immigration boom.

It was the generation that bore hippies who marched in anti-war protests and fought for rights in the 60s.

But despite the imagery that lingers, that crowd was very much in the minority and Boomers were then and still remain a very conservative generation.

It’s an attitude that has pervaded their approach to investing, built chiefly around their thirst for property.

Boomers are risk-averse, conservative investors who have favoured accumulating income-generating bricks and mortar.

They benefited from a massive bump in property prices in the 1980s and 90s and yet another in the last few years.

Boomers have typically steered their spare cash into ultra-safe term deposits and bonds.

They also embraced superannuation with many adopting self-managed super funds to have more control over their retirement savings.

They are now more conservative than ever as they move to preserve their wealth, guaranteeing them a steady income in retirement.

Only a portion of them have adopted online platforms and technology to manage their investments.

Generation X (Born 1965-1980)

Risk tolerance: Moderate

Preferred assets: Property, equities

The eldest of Gen X turns 60 next year with the majority enjoying their biggest earning years in the workforce and planning for their retirement.

Like the Boomers, they are conservative by nature but with a more ambitious streak that classifies them as ‘balanced investors’.

They have also tended to favour real estate although rising property prices have forced some to look elsewhere to invest.

This has forced Gen X to adopt a moderate risk tolerance and driven many more towards shares, managed funds and ETFs than their predecessors in an attempt to diversify and manage risk.

Their appetite is typified as having a growth mindset but with the backbone of long-term stability.

Gen X has placed a significant emphasis on the importance of superannuation with many making voluntary contributions to grow their balance.

They are largely comfortable using online banking and investing platforms to assist with their portfolio management and financial planning.

Millennials (Born 1981-1996)

Risk tolerance: High

Preferred assets: Shares, ETFs

More so than Gen X, the investment strategies of Millennials or Gen Y have been influenced heavily by circumstance.

This is when generational differences in attitudes towards investing really become apparent.

The booming property market has precluded many of them from dipping their toes in the water and forced them to look elsewhere.

Many who have bought real estate have needed the assistance of family or entered into a joint venture.

Others have turned to seeking higher returns through shares and ETFs with a preference for low-cost passive investment options such as index funds.

They have had particular success with US and global shares which have outperformed Australian shares and even property in recent times and without the associated costs that come with owning real estate.

Millennials are the first generation with a significant number to embrace cryptocurrencies, viewing them as an alternative asset class and hedge against traditional financial systems.

They are also the first generation interested in ethical and sustainable investing, favouring companies and funds that align with their progressive values regarding environmental, social and governance (ESG) issues.

With a longer investment horizon than those before them, their risk tolerance is high and they are more comfortable accepting risk in the pursuit of high growth.

However many were not in the market during the GFC in 2007 and their carefree attitude lingers from having not experienced a significant economic crash.

Millennials are tech pros and trust financial apps, online platforms and robo-advisors for investing.

They are also more likely to engage with peer-to-peer lending and crowdfunding platforms.

Gen Z (Born 1997-2012)

Risk tolerance: Very high

Preferred assets: Shares, ETFs, cryptocurrencies 

The oldest Gen Zs are still in their mid 20s and probably working their first serious job.

They are just beginning to explore investment options.

And while many aspire to own property, a great number are worried about its affordability and have turned to alternative routes to realise their investment goals.

Like Millennials, they have poured their money into high-performing US and global shares and ETFs that have actually given them hope of quickly building a deposit for a house.

They also like micro-investing platforms that accept small amounts to be invested regularly. 

Gen Z has the most time to invest hence rightly adopts the highest risk tolerance levels, seeking high returns from bold or even brazen investments, often driven by the voice of their generation, social media.

They invest in cryptocurrencies and other digital assets like NFTs (non-fungible tokens) without fear and like no other generation, viewing them as innovative and lucrative opportunities.

They are driven in numbers towards ethical investing, seeking financial returns from supporting companies that align with their ESG values.

Gen Z is also the most tech-savvy generation, utilising mobile apps and social media to manage and shape their investments.

Yet largely because retirement is so far away, Gen Z is the least affiliated with superannuation.

Concerningly, only 13 percent of its number view super as a key investment.

That is despite the superannuation guarantee scheduled to increase to a record 12 percent next year.

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An individual’s risk tolerance level is proportional with their number of years remaining in the workforce.

That makes good sense. 

While generational differences in investment strategies are a result of the opportunity, circumstances and technology each generation experiences.

New opportunities are largely borne from necessity.

Few Gen Zs can afford property hence they explore other avenues.

It begs the question, what investment opportunities are you missing out on?

Regardless of your age and resources, there are countless investment opportunities at your disposal.

What is important is finding ones that align with your risk tolerance level, time horizon and for some, your ethics.

You may even be able to invest in property without a deposit if you so desire.

You simply need some sage advice.

And when you need rock solid investment advice you can depend upon, you should look no further than Calder Wealth Management.

CWM are experts in the business and have an envious pedigree in the industry spanning more than five decades.

Our team of professionals can help you establish your investment strategy or check what you already have in place is meeting your retirement goals.

We’ll work with you to develop a sound investment portfolio whatever your age and financial goals.

There really is no substitute for quality financial advice from a team personally invested in your wealth accumulation.

At CWM, we pride ourselves on leading our clients into the future with structure, financial stability and confidence. 

Contact us today to discuss all of your financial needs and concerns.

Written by Jodie Schroeder

The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.

Taxation, legal and other matters referred to on this website are of a general nature only and are based on Calder Wealth Management’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.

Calder Wealth specialises in wealth management with a focus on advice, investment, sustainability, insurance and finance.