Young Aussie Investors: Optimism Rises Amid Inflation Concerns

• The number of young investors (18-34) on track to achieve their goals has risen 21 per cent in the last quarter.
• Young investors are more confident in their investments and the home market economy than their older counterparts
• Young investors are the only age group who still consider inflation the biggest external risk to investments.

Sydney, 4th July 2024 – Half of young Aussie retail investors feel they are on track to achieve their primary investing goals, according to the latest Retail Investor Beat data from trading and investing platform eToro, showing increased optimism compared to previous quarters. However, the impact of inflation is still an ongoing concern, with many young investors continuing to cite it as the greatest external risk to their portfolio.

In the study of 1,000 retail investors across Australia, those aged 18-34 have shown a notable improvement in their outlook over the last quarter. Since Q1 2024, the percentage of young investors who believe they are on track to achieving their investment goals has risen from 41 per cent to 50 per cent, marking a significant 21 per cent jump in young, optimistic investors from the start of this year.

Robert Francis, Managing Director at eToro Australia, says: “The boost in optimism that we’ve seen from young investors comes as global markets hit recent record highs, with the S&P 500 and NASDAQ the notable winners amid a gradual resurgence of bullish sentiment.”

This quarter, 78 per cent of young Australian retail investors are confident in their investments, up from 73 per cent in Q1. This is the highest confidence rate of any age group surveyed for Q2, closely followed by retail investors over 55s, 77 per cent of which are confident in their investments.

Local young investors are also more optimistic about the Australian market economy, rising from 39 per cent in Q1 this year, to 45 per cent in Q2. 18-34-olds are not only more confident in the home market than last quarter, but the most confident of all age groups overall. Young investors hoping for record-breaking market conditions locally may be left disappointed, however, as persistent inflationary conditions continue to cast a shadow over the Australian economy.

Table shows % of each age group confident in the Australian market economy 

Inflation, a ballooning concern for young investors

Inflation remains the biggest concern for young Aussie retail investors. That concern is growing, too, with an increased proportion viewing inflation as the most significant external risk to their investments, growing from 26 per cent in the previous two quarters, to 34 per cent in Q2 2024. Australia’s monthly CPI indicator reaching 4 per cent for May (well above the market’s prediction for 3.8 per cent and April’s inflation rate of 3.6 per cent) may be one of the core drivers of this concern.

When delving into young Aussies’ investing preferences, young retail investors are the most likely to hold discretionary consumer goods out of any age group (35 per cent), a sector that tends to be negatively impacted by inflation due to changes in consumer spending. Aussie retail investors over 55 on the other hand, are more likely to hold commodities (24 per cent) than their younger counterparts. Some commodities, such as the safe haven of gold, are typically seen as being a good investment during periods of high inflation, and provide reasoning as to why older investors may be less concerned than other demographics about inflation’s impact on their portfolio. 

“Young investors often face the challenge of limited disposable income, which makes regular investments a difficult endeavour. This is especially true during periods of high inflation. Given their tendency to invest in more volatile sectors and embrace greater risks, young investors’ concern over inflation’s impact on their portfolio and ability to invest regularly tends to heighten during these inflationary periods.” says Robert Francis.

Table shows what each age group believes is the biggest external risk to their investments

“These findings highlight a pivotal shift in the investment landscape among young Australians. Their growing optimism and proactive engagement reflect a forward-thinking mindset that’s essential for navigating today’s markets.”

“However, their heightened concern about inflation, especially with Australia’s CPI surging to its highest level this year, underscores the responsibility of financial firms and investment platforms to provide them with robust education on the cyclicality of markets and on strategies that can help them achieve their investment goals while mitigating macro risks,” says Robert Francis.

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About this report
The latest Retail Investor Beat was based on a survey of 10,000 retail investors across 13 countries and 3 continents. The following countries had 1,000 respondents: UK, US, Germany, France, Australia, Italy and Spain. The following countries had 500 respondents: Netherlands,  Denmark, Norway, Poland, Romania, and the Czech Republic.

The survey was conducted from 15 February – 5 March 2024 and carried out by research company Opinium. Retail investors were defined as self-directed or advised and had to hold at least one investment product including shares, bonds, funds, investment ISAs or equivalent. They did not need to be eToro users.

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