How investors decide what to invest in by age and wealth

/

While investing is getting more personal, we all choose where to put our money based on several factors that have nothing to do with taste - they are based on what the products can do for us at that stage of our lives. These factors include age, wealth, and personal circumstances, with a recent report (Rice Warner's Personal Investment Market Projections 2015 report) examining just how we go about what, when. 

Australians, it seems, love property. This is our largest personal asset, but there is also a similar amount held in cash and term deposits, the report says; elderly Australians 'derisking'. 

Key findings of the report include

  • Equities make up just 10 per cent of personal investments directly held by households, with those aged 75 or over holding 19 per cent of equities investments. 
  • High-net-worth (HNW) individuals hold a significant portion of personal investments in direct equities and direct property, plus wealth in family businesses. 
  • HNW individuals also opt for international investments. 
  • Middle-income Australia holds a lot of non-super investments in term deposits, which the report states as being 'easy to access and understand'. 
  • Asset-rich investors are opting for investment properties, over voluntary superannuation contributions. 

Our age and stage

Ages 15-24

  • Assets tend to be in life savings products, platforms, managed funds and term deposits
  • About 40 per cent hold personal investments in cash
  • There is low exposure to direct equities and few can afford to invest in direct property

Ages 25-34

  • Direct property investments rise to 44 per cent of personal investments
  • Negative gearing is more common
  • May buy property, but continue to rent themselves

Ages 35-44

  • Direct property investments rise significantly, reaching an average of 49 per cent of personal assets - the highest of all age groups
  • Term deposits and cash have been a stable for all age groups, and this is no exception

Ages 45-54

  • Strong direct property allocations - 48 per cent
  • Managed funds and life products reduce
  • Term deposits remain high (35 per cent)
  • Declining direct equities investments over most age groups

Ages 55-64

  • Direct property investments lower to 45 per cent
  • Allocation to cash and term deposits rises to 41 per cent

Ages 65-74

  • Direct property investments reduce, and continue to reduce with age
  • Interest in direct equities, cash/term deposits and equities increases slowly

Age 75+

  • Significant reduction in direct property allocations
  • Increasing allocation to direct equities and term deposits
  • Population with most direct equities