Young investors like to invest in products that are tech-friendly, easy to use, cost effective and simple to understand, says investment educator and expert Sarah Riegelhuth

The ‘Y’ in Generation Y could actually stand for ‘why’.

Young investors are proving to be more knowledgable than previous generations because they are curious in nature and constantly ask the question ‘why?’.

With a wealth of information at their fingertips via the internet, they have the ability to get those answers easily and immediately.

The young are active in stockmarket trading. They are the fastest-growing demographic among Australian shareholders.

Share ownership among 18-24 year-olds has doubled from 10 to 20 per cent in the past five years, according to ASX research carried out by Deloitte. And 39 per cent of 24-34 year-olds now own shares, up from 24 per cent in the same period.

Young investors question whether or not the same investment strategy their parents used to create wealth still applies — and whether or not it will work for them.

Gen Y tend to be interested in investing in things they understand and things they use in their everyday lives — for example sectors such as technology and the medical industry where exponential changes are occurring.

They understand their greatest asset is their ability to earn income and that their time is best spent generating income or having leisure time. In turn they’re seeking an investment strategy that’s simple and supportive of this desire to enjoy life.

Many Gen Y look for passive investment vehicles such as Exchange Traded Funds (ETFs) that provide a diversified exposure of investments linked to a particular index.

They’re also investing in Separately Managed Accounts (SMAs) that provide direct share ownership, while being managed by a professional fund manager so they don’t have to pick stocks themselves.

Essentially, they’re looking to invest in products or structures that are tech-friendly, easy to use, cost effective and simple to understand.

One big difference between this generation and previous generations is they want to have a direct influence on building their wealth.

This could either be by setting up their own business or through investing in others (start-ups) and then using their own skills or networks to improve the businesses they have invested in.

Property is still a focus for Gen Y, however the active nature of managing and dealing with the administration and logistics of owning property can be a turn-off.

The good news is we’re seeing Gen Y investors hold off on property until they’ve built a substantial share portfolio and cash position, resulting in far more successful outcomes from their property investments.

Not being completely cash poor and tied to one investment means they can continue to build wealth outside of an investment property.

Recently named one of Australia’s 50 Most Influential Women Entrepreneurs, Sarah Riegelhuth aims to inspire, educate and empower every young girl and woman to be financially independent. She is an award winning money and finance expert, entrepreneur and the author of Get Rich Slow and the online, financial planner, 8 Week Money Makeover. Sarah Riegelhuth is the co-founder of award-winning, Gen Y financial advisory firm,  Wealth EnhancersWE LOVE NUMB3RS and the League of Extraordinary Women, Australia’s largest movement for young female entrepreneurs.