Younger investors lean into buy-and-hold strategies
Amid market volatility, Gen Y and Z investors are resisting selling pressures and leaning into buy-and-hold strategies to build wealth, according to new data from OpenMarkets.
An analysis of over 300,000 sponsored accounts by the trading and wealth fintech noted that some 64 per cent of trades by Gen Y and Z investors in the first quarter of 2023 were buys. In comparison, some 61 per cent of Gen X trades and 54 per cent of Baby Boomer trades were buys.
Young Australians banked among the lowest of the cohort with an average of 10.7 trades annually, while the figure stood at 16.3 for Gen X and 27.3 for Baby Boomers.
They also tended to have reduced diversity in their portfolios year on year, with the average Gen Y and Z investor holding 4.5 equities, compared to 6 for Gen X and 9.1 for Baby Boomers.
“In an era where young people are often associated with ‘hype’ stocks, finfluencers and short-term wins, it is interesting to see this is not necessarily reality. Our data shows younger Australians are trading less, sticking to stocks they know, and gradually accumulating them to build long-term wealth,” said Openmarkets’ chief executive, Dan Jowett.
“What also stands out for all generations is that portfolios are becoming marginally less diverse, adding risk as market volatility continues. All investors should understand the impact of risk and volatility on portfolios as they consider short and long-term goals.”
As per the data, younger investors tended to trade in small caps. However, Q1 2023 saw higher Gen Y and Z interest in defensive ETFs and large-cap stocks.
Lithium stocks garnered the most buying activity from this cohort, where their most bought stocks in Q1 2023 were lithium companies Pilbara Minerals and Core Lithium, along with coal miner Stanmore Resources. They were also less focused on the banking sector than all other generations.
“Retail interest in lithium mining and processing remains at all-time highs in the wake of rising market demand for lithium-ion batteries and car manufacturers investing in adding more electric vehicles to their fleet,” Openmarkets noted.
With the rising cost of living, rents, and interest rates eroding the free cash flow of young Australians, trading among older generations was expected to outpace Gen Y and Z in future quarters, it added.
AUTHOR
Rhea Nath
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