Shifting demographics are changing priorities for retail investors

The investment community is increasingly comprised of what might be termed educated investors.

A range of factors are contributing to the trend. The improving wealth of the Australian middle class; the introduction of the superannuation guarantee; and the rise of self-managed super funds – are all delivering a more engaged and demanding retail investor.

As five million baby boomers straddle the early-to-mid retirement years, they will seek out yields that underpin an older but active lifestyle. In addition to older boomers looking for reasons to invest, and for a rationale to divest, Australia’s stock market will also garner more attention from millennials. These are the kids of baby boomers. They’re Australia’s most educated generation and they take a keen interest in saving and superannuation.

Millennials will be exposed to superannuation issues across their entire working lives, and the stock market is more accessible to them than property. They might also prefer to invest in the Australian share market rather than in say buying a home (which would, after all, require millennials to stop eating smashed… oh, never mind). Seven million millennials now occupy the lower rungs of the workforce and will continue to make investment decisions for decades to come.

In between is Gen x, the six million or so Australians who now quietly straddle the peak-working, the teenager-rearing, the job-scrambling stage of the lifecycle. The advantage Gen x has over boomers is they have had superannuation for much of their working lives and, like millennials, are better educated and maybe even more confident about their investment decisions.

Common psychology cuts across generations

But then again, this survey and report by KPMG Acuity shows that for all these demographic factors, at the end of the day the decision to buy or sell is driven by behavioural and even psychological factors.

The survey opens by asking two important questions: what would make you buy shares in an Australian company and what would make you sell shares in an Australian company? Respondents were free to offer as many reasons as they wish; in all, there are 22 reasons cited for buying and 22 reasons cited for selling. More than half the respondents found 14 different reasons to invest in shares including “dealt with whistleblowers fairly”. But when asked for reasons for disposing of shares, more than half the respondents found just five reasons.

So when we want to buy, we find umpteen reasons to ‘press ahead’ as evidenced by this survey. But when we want to sell, we offer a short sharp excuse and – like a jilted lover – we move on.

Multiple reasons to buy are like gateways to the same destination. None of these reasons should be ignored by business; they all coalesce to reassure investors that they are making the right decision. Oftentimes, investors like to reaffirm their decision by looking for, and being able to cite, supporting facts.

This is especially so in a market in which everyday Australians are taking a more active role in deciding where their money is invested.

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