Share investing is easily the most popular way Australia invests besides savings accounts and more people are tipped to jump on the bandwagon.
A report by Finder published last Friday found that more than one in four people in Australia – 27 per cent – invest in shares.
While this was behind savings accounts (44 per cent) and non-investors (34 per cent), it was easily more popular than forex, ETFs, superannuation or gold.
Finder also observed that 13 per cent of Australians began share investing during COVID-19.
Nevertheless this was lower than other countries. For instance the US and UK has 35 per cent and 33 per cent of people owning shares outside their retirement funds.
With interest rates not going anywhere for some time Finder urged people to look beyond savings accounts if they wanted returns.
Nevertheless it warned that markets had potential to be volatile. Despite Friday’s drop, the market’s recovery since March 24 last year has largely been stable.
But the five-week plunge prior to that saw markets get slammed and investors rush to the exits.
The ASX lost 33 per cent and Fidelity Research found 18 per cent of global investors sold all their stocks – a figure that rises to 33 per cent when you only include investors over 65.
Fractional investing & robo-advice platforms tipped to do well
While Australia’s millennials have less money to engage in share investing, that doesn’t mean they don’t want to.
Finder tips platforms that allow investors to engage in fractional investing – chip in small amounts of money over long periods of time – to do well and help millennials get into investing.
Fractional investing may involve small amounts as they round up spending amounts to the nearest dollar, but this could add up in due time.
“Apps such as Raiz (ASX:RZI) and Spaceship Voyager have seen an immense growth of this market, particularly among younger generations who may lack sufficient savings to enter the traditional share market,” it said.
“For the generation that has been criticised for choosing smashed avocado over superannuation, micro-investment apps help to reignite a culture of savings without making consumers feel like they are missing out on anything.”
Finder noted that between 2016 and 2020, Raiz grew by a factor of 24 and holds $464 million in investor assets.
One other ASX stock offering fractional investing is Domacom (ASX:DCL) which lets people buy a share in a property of their choice and sell out easily, unlike managed property funds.
Platforms including Stockpile, Robinhood, Betterment and Stash allow fractional investing as well.