Younger generations are boosting the ranks of Aussie investors
Share trading chart. (Getty)
The ranks of Australian investors swelled during the pandemic, with large numbers of young people getting involved in financial markets for the first time.
It’s a trend that continues and trading platform providers are increasingly looking to cater for this new cohort by offering attractive price entry points and more educational tools.
An Australian Stock Exchange study in 2023 found that 51 per cent of the population hold investments outside of their primary residence and superannuation fund. Of those, 9 per cent were “next generation” investors in the 18-24 age bracket - and the number is increasing, with almost two thirds of those entering the market in the past two years.
“During the pandemic we all had more time on our hands, and fewer opportunities to spend our money, and as a result a wave of people entered the market,” says Irene Guiamatsia, Head of Research at Investment Trends, which compiled the research for the ASX report.
Adults aged under 20 made up roughly 1 in 6 of the new entrants during the pandemic, Guiamatsia adds, noting that they were among the biggest beneficiaries of government policy measures such as Jobkeeper, which put them in a better financial position to invest.
“There’s no doubt that the profile of a typical investor is changing, and it’s moving lower in age bracket,” she says.
Jess, 19, was partly inspired to open an account with Westpac Share Trading by her mother, who works in the fund management industry.
“I started looking at the share market and was interested in being able to invest in companies that I knew and had bought their products or services and that I thought were good companies,” Jess says.
When selecting a trading platform, Jess wanted something that was easy to use and offered educational resources to help better inform her investment decisions.
Equally, younger investors tend to be more sensitive to pricing, partly because they’ve not had as much time to build up their financial security buffers.
Online share trading is a highly competitive industry, with plenty of small-scale disruptors offering low prices. In recognition of this, Westpac Share Trading, which has been serving retail investors for 25 years, has introduced a new pricing structure.
“Our new tiered pricing structure will help cater for a variety of trading levels on our platform,” says Rohan Gorringe, Head of Westpac Share Trading.
“By reducing our brokerage rates up to 75 per cent for smaller trades*, we also hope to remove some of the barriers to entry that our newer investors face.”
The restructured pricing comes alongside an ongoing emphasis on investor education. The platform offers an education hub including guides, articles and webinars. Investors can also book 1:1 sessions with the training and education team, while there are plans to include more video content and interactive learning modules.
“Research is equally important to help investors make informed decisions. Through our partnerships with Morningstar, MST Financial (Sandstone Insights), Financial News Network and our Westpac economics team we have a comprehensive research offering for users to take advantage of. We are also proud to have been the first bank in Australia to provide stock level ESG risk ratings on the platform,” Gorringe says.
The platform was recently recognised in the 2024 WeMoney banking awards as “best for quality” and “best for long term investors” for online share trading, and has won Mozo money website's award for 'Exceptional Share Trading App' for fours year in a row.
Guiamatsia welcomes moves by major financial institutions such as Westpac to make their trading platforms more accessible to all types of investors.
“Large institutions often evoke sentiments of protection and security from consumers. By improving accessibility as well, they are broadening consumer choices in a meaningful and positive way.”
The rise of ETFs
Jess’s portfolio is currently focused on direct equities, but she plans to look at moving into Exchange Traded Funds, which bundle a range of assets into a single tradeable entity and are becoming increasingly popular with younger investors.
ETFs give investors “the ability to achieve instant diversification through a single trade, across jurisdictions and without a significant minimum investment,” according to Te Okeroa, Head of Sales, Trading & Relationships, in a
Convenience and value is a major part of the appeal of ETFs to time-poor younger investors, the report said, allowing them to “leverage off the ETF issuer’s experience and resource to manage their exposure in a very low-touch manner.”
At a broader level, the wealth management industry needs to adapt to generational change, as baby boomers retire from the workforce and are replaced by Millenials and Gen Z.
“Younger generations expect greater convenience, speed, transparency, and self-serviceability,” Okeroa said.
They may face a different set of economic pressures from previous generations emerging from rapid technological change and the growth of artificial intelligence, but their long-term goals are similar.
“I want to build up a portfolio of investments that will grow my capital over time,” says Jess. “In the future I might use some of this to buy a house, but mainly I want to build up a valuable asset. It’s good to start investing early and watch your investments grow.”
*$4.95 for trades up to $1,000 when settled via a Westpac cash investment account or online investment loan.
For more information on Westpac Share Trading and its updated pricing structure, visit the website landing page.