Suite 8 / 260 Auburn Road, Hawthorn 3122
Phone: 03 9214 4100
Fax: 03 9818 6008
enquiries@trumpetfinancial.com.au
 
 
eWombat Search
  LATEST FINANCIAL NEWS
 
Hot Issues
Powerful Budgeting, cash flow and Super Tools available on our site.
Australia's leading causes of death - ABS
Australian Dietary Guidelines and healthy eating chart (PDF)
Government introduces first home scheme laws
Are young investors wasting their youth?
ATO granted super enforcement powers
The great Australian (retiree) dream
ATO to release further guidance on reserves
A real-world benchmark for SMSF performance
How is your super going, ready for retirement?
Our 'hardest' SMSF tasks
Lack of literacy promotes unrealistic goals
Young investors: Time is on your side
Is your SMSF retirement-ready?
Key Economic Indicators, 2017 - updated
Investors acting their age
ATO locks in details, addresses panic on real-time reporting
Government ‘undermines’ tax system in new moves on property expenses
Multiple super accounts in a 'gig' society
Why Australian retirees aren't happy and what we can do about it
Doing a budget is a good idea but ....
Technical expert flags estate planning strategies for 2017-18
Government to shut down salary sacrifice loophole
Items that heat up your depreciation deductions
‘Tens of thousands’ of SMSFs at risk with ECPI
Do’s and don’ts of estate planning
LISTO to help boost women’s super
Smart ways to stretch retirement money
Low economic growth likely for years
Recorded Crime - Offenders, 2015-16
Adequacy of savings still a concern among Australians
‘Bank-like heists’ make way for new wave of cyber crime
Give your children a saving and investing edge - for life
Articles archive
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Investors acting their age

Young investors can fall into the trap of being too conservative for their own good, forfeiting compounding long-term returns from growth assets.



       


 


This can lead to the question: How do we tend to invest at different ages?


Of course, a higher percentage of Australians hold much of their investment savings in the default diversified portfolios of the big super funds – often with extra savings invested outside super.


And the way that investments held outside the big super funds' default portfolios are allocated in different asset classes provides a useful insight into personal investment preferences by age.


Independent consultants Rice Warner includes a look at investor preferences by age and wealth in its Personal Investments Market Projections 2016 report.


This report broadly defines the personal non-super investments market to include all investment assets held by investors in their own names or through trusts and companies. It does not include family homes and personal effects.


Rice Warner' discussion of asset allocation of personal non-super assets by age begins with investors aged 15-24. Parents and grandparents often have made investments on their behalf; and this appears to show up in their asset allocations.


Half of the personal investment assets of investors aged 15-24 are in cash and term deposits – second only to investors aged over 75 – and 27 per cent is allocated to life products, investment platforms and managed funds.


Interestingly, 22 per cent of the personal, non-super assets of these investors under 24 are in direct property. Young people generally would not have the money to invest in property by themselves; this percentage suggests plenty of parental help. And they have almost no investments in direct equities.


A point worth noting is that the personal, non-super investment patterns of these young investors seem to setup a broad path for their investing at older ages– yet with some key variations in asset allocations with age.


Consider these for asset allocations of personal, non-super investments at different ages shown in the Rice Warner report:


  • Cash and term deposits: aged 15-24 (50 per cent of their assets), aged 25-34 (46 per cent), aged 35-44 (37 per cent), aged 45-54 (38 per cent), aged 55-64 (43 per cent), aged 65-74 (46 per cent) and aged 75-plus (52 per cent).
  • Direct investment property: aged 15-24 (22 per cent of their assets), aged 25-34 (47 per cent), aged 35-44 (50 per cent), aged 45-54 (47 per cent), aged 55-64 (43 per cent), aged 65-74 (38 per cent) and aged 75-plus (17 per cent).
  • Life products, investment platforms and managed funds: aged 15-24 (27 per cent of their assets), aged 25-34 (3 per cent), aged 35-44 (7 per cent), aged 45-54 (7 per cent), aged 55-64 (6 per cent), aged 65-74 (7 per cent) and aged 75-plus (14 per cent).
  • Equities: aged 15-24 (1 per cent of their assets), aged 25-34 (5 per cent), aged 35-44 (6 per cent), aged 45-54 (9 per cent), aged 55-64 (8 per cent), aged 65-74 (9 per cent) and aged 75-plus (16 per cent).

Keep in mind that some investors may decide to have well-diversified portfolios for their savings in large super funds and self-managed super funds while taking a different approach for their personal, non-super holdings.


For instance, many investors choose to hold direct property in their own names and perhaps with some cash, fixed-interest, selected direct shares and managed funds.


The appropriate course for the asset allocation of personal, non-super investments will depending much on personal circumstances, including professional advice received.


It can be a pitfall for an investor to look at their personal, non-super portfolio or their super portfolio in isolation when considering the appropriateness of their asset allocations. Consider taking professional advice on this point if you haven't already.


Some investment habits – good and bad – tend to be set at a young age. It is vital to get on the right path at the beginning of your investing life.



Robin Bowerman,
Head of Market Strategy and Communications at Vanguard.
09 August 2017
www.vanguard.com.au




26th-August-2017
Trumpet Financial Pty Ltd ABN 11 443 516 384 Corporate Authorised Representative (No 327756) of Aon Hewitt Financial Advice Limited AFSL 239183 ABN 13 091 225 642
Registered Address: Level 33  201 Kent Street, Sydney NSW 2000 | Sitemap | Disclaimer | Privacy Policy | About Aon Hewitt Positioning