Australians are ignoring the golden rules of investing: HSBC survey

As cost-of-living pressures continue, Australians’ investing habits are shifting as they are diversifying less and more frequently seeking the familiarity of their home market, according to HSBC’s third Investor Insights Survey¹.

Investors are still eager to tinker with their portfolio but are becoming more comfortable sticking to their long-term plan; 65% of Australians report changing their investment approach in the last six months, down 11 percentage points from 2023.

The research also revealed differences between generational investing behaviours of Australians, with the younger cohort more active and experimenting with riskier products compared to older counterparts.

Return to the golden rules of investing

More than a quarter of Australians (26%) are only investing opportunistically or when they have money to invest, an increase of six percentage points on 2023 (20%). Last year, more Australians reported investing a few times a year (2023: 26%, 2024: 23%).

Commenting on the research, David Talbot, Senior Manager, Investments at HSBC Australia said the survey indicates investors have forgotten the golden rules of investing, including diversification.

“Australians are most likely investing less frequently given the amount of uncertainty we have seen in markets and the global economy this year and are perhaps trying to time the market for a quick win.

“Despite this, investors should remember the importance of having a diversified portfolio, both geographically and by sector, to weather market fluctuations,” he said.

Generational divide

Younger Australians are investing in more volatile products, with Gen Z (39%) and Millennials (36%) investing in cryptocurrency / NFTs the most out of any financial product.

When looking at sectors, in the next six months younger Australians are considering investing more in technology (Gen Z 44%, Millennials 46%) compared to older Australians who prefer financials (Gen X 29%, Baby Boomers 37%).

On average, Younger Australians also putting more of their monthly net income towards investing (23.8% Gen Z, 21.2% Millennials) compared to older counterparts (9.4% Gen X, 7.6% Baby Boomers).

“The sandwich generation, those looking after both children and parents, are most likely to feel financially squeezed at this life stage. The material impacts of cost of living really shine through when it comes to investing, as Gen X are engaging less with their investments compared to Gen Z.

“Gen Z are quite financially active and willing to take on more risk when investing. Given this generation is facing challenges accessing the housing market, they are taking it upon themselves to build wealth through methods more accessible to them, and allocating more of their income to do so,” Talbot said.

Gen Z and Millennials are investing more frequently than their older counterparts, with more than half (Gen Z 54%, Millennials 55%) investing on a weekly or monthly basis, compared with just 22% of Gen X and 7% of Baby Boomers.

“Younger Australians should be cautious about volatile investment products and consider building a diversified portfolio for long term wealth generation,” he added.

ADDITIONAL STATISTICS

Minimum amount thought to be needed to start investing

• 2024 research reveals that on average, Australian investors believe that $13 251 is the minimum amount needed to start investing, significantly less than $15,245 in 2023
• Women think less is generally needed to start investing this year compared to 2023 ($8,839 compared to $14,285)
• While on average, Gen Z believe more is generally needed to start investing this year compared to last ($18,283 compared to $13,203).

Frequency of making investments

• Just over a quarter (26%) of Australian investors do not invest regularly, up from 20% in 2023
• In the last six months, younger Australians are more likely to have made an investment (Gen Z 85%, Millennials 81%) compared to older counterparts (Gen X 50%, Baby Boomers 51%)
• 15% of Gen Z are making daily investments, the highest of any generation making daily investments
• Older Australians are investing less frequently, with Gen X (77%) and Baby Boomers (92%) only investing a few times a year or less often.

Sources of investment information

• Out of all social media platforms surveyed, YouTube (12%) is referred to the most for investment information (Instagram 9%, Facebook 8%, TikTok 5%)
• More than eight in ten (85%) of investors seek investment information, with a financial adviser being the most common source.

Decline in female investors continues

• Men are more likely than women to have made investments in the last 6 months (76% compared to 55%).

Most popular financial products invested in the last six months (outside of superannuation, property)

• Preference for bonds, exchange traded funds (ETFs), and managed funds investments over share investments have continued to trend downwards since 2022 Total % agree 2022 (55%), 2023 (53%) and 2024 (47%)
• ETFs remain popular amongst younger Australians, with 13% Gen Z and 19% Millennials investing compared to 8% Gen X and 3% Baby Boomers.