Contrary to popular belief, Millennials (26-41 year olds) and Generation Z (18-25 year olds) are leading the charge when it comes to managing and investing in self-managed super funds (SMSF). These are the findings of a new national survey** commissioned by TBanque.
The survey of 1,000 Aussies found that almost half of people under 35 (47%) have an SMSF. The trend is relatively new with the majority of respondents (67%) indicating they have been building their fund for just 1-5 years.
More broadly, the data showed superannuation is important for 90% of people under age 35.
Zoomers just as likely as Boomers to have an SMSF
Self-managing is particularly on the rise amongst Gen Z with 86% of those who have an SMSF, noting they created it within the past five years. Zoomers are just as likely (45%) to have an SMSF as their Baby Boomer counterparts approaching retirement.
Young people indicated the desire to take more control of their investments, with a third (33 per cent) believing they can get a better average return managing their own super than with a traditional superannuation fund. They also say they’re keen to invest in the future (37 per cent) as well as prepare nest eggs for retirement (40 per cent).
Millennials contribute more cash annually
The research revealed at least one third of Millennials contribute between $5,000 – $10,000 annually to their SMSF (36 per cent), whilst half of Gen Z investors contribute $1,000 – $5,000 per annum (50 per cent). Just 16 per cent of people under 35 will contribute over $10,000 to their fund.
Young people prefer stocks and crypto over property
The data indicated a large majority of Millennials and Gen Z with an SMSF are focused on generating a diversified SMSF portfolio (Millennials 84%, Gen Z 75%), filled predominately with stocks (Millennials 60%, Gen Z 72%), crypto (Millennials 43%, Gen Z 64%), and property (Millennials 41%, Gen Z 50%). By contrast, more than half (54%) of respondents aged over 45 have at least one property in their SMSF.
Of Millennials invested in stocks, 45% prefer the ASX market and 32% opt for US markets, while the opposite is true for Gen Z, who favour US markets (47%) over the ASX (29%).
Tech, energy, real estate and financial were the industries of choice for both cohorts, with healthcare a priority sector for Millennials and materials sectors a focus for Gen Z.
Conversely, young investors shy away from instruments with higher perceived risk like CFDs, options and FX.
Influenced by long-term returns and expert industry sources, Millennial and Gen Z Aussies tend to rebalance their SMSF portfolios once a fortnight (Millennials 28%, Gen Z 35%).
Education is the biggest barrier to self-managing
Although 27% of young people who don’t have an SMSF plan to organise one, there are barriers to entry that are holding back those who aren’t self-managing:
- They don’t know where to begin (Millennials 42%, Gen Z 40%).
- They don’t know how an SMSF works (Millennials 36%, Gen Z 38%).
- They prefer someone else to manage their super on their behalf (Millennials 33%, Gen Z 29%).
The survey illustrates that Millennials and Gen Z Aussies realize the importance of investing early and are increasingly taking their superannuation and finances into their own hands. They understand that financial planning is important to put themselves in an advantageous position for a comfortable retirement.
**Survey research conducted by Appinio from 20 March to 23 March 2022. In total, 1,000 Australians, 495 men, and 493 women were sampled across all major cities in Australia. They did not need to be TBanque users or investors.
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