5 amazing facts about ASX share market investors

Credit: Mark Moz

Did you know Australia’s share market, the ASX, represents less than 3% of global share markets but has performed best over the ultra-long term?

Small, but growing fast. It’s a very compelling combination. Yet, according to the latest ASX Share Ownership Study (2014), just 33% of Australians own shares directly (that is through a personal SMSF or company brokerage account).

Put another way, two out of every three Australians are avoiding the investment vehicle that has proven to be the best wealth generator over the ultra-long term.

If we combine both direct and indirect investors (those who have listed managed funds outside of superannuation), the number of Australians with exposure to shares jumps to 36%.

Here are five other facts about Australian investors:

  • Of the 33% of Australians investing directly, 43% are women
Source: ASX Share Ownership Study, 2014

Source: ASX Share Ownership Study, 2014

  • 55% of investors believe you can only succeed by investing long term

Despite mounting evidence suggesting otherwise, alarmingly, 45% of investors believe they can succeed by investing in shares over the short term. In my opinion, if you approach the share market with short-term goals, you’ll be bitterly disappointed by the outcome. After years of investing and commenting on share markets, never once have I found a short-term investment strategy that works.

  • Just 15% of 18-24-year-olds own shares
Source: ASX Share Ownership Study, 2014

Source: ASX Share Ownership Study, 2014

While it may be understandable that students or those just starting out in their careers haven’t yet invested in the share market, it’s unfortunate because history has proven that the longer your money is invested – the larger it will grow.

  • Few Australians invest in overseas shares
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Source: ASX Share Ownership Study, 2014

In 2014, just 5% of the population invested in foreign shares. But while most Australians invest in local property and shares because they have proven to be both comfortable and rewarding, the outlook for the local market may not be as promising as it was before.

Indeed, over the 10 years to June 2015, the average annual return of international bonds (7.6%) and shares (7.8%) performed better than Australian residential property (7%) and shares (7.1%).

Looking ahead, I believe investors should not rely on the fact that Australian shares and residential property have returned an average of 9.5% per year and 9.8% per year, respectively, over the 20-year period to June 2015. Investing overseas should be a matter of priority for local investors.

  • Of direct investors, 43% understand how the share market works

This is interesting because if you are a direct investor (i.e. you are holding shares in your own name), but don’t understand how the share market works, it may not be a good idea to be investing! With the rise of the internet, more and more free information, tutorials and workshops are available to those willing to learn. In my opinion, investing in yourself is the best investment you’ll ever make.

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Motley Fool writer/analyst Owen Raszkiewicz has no position in any stocks mentioned. Owen welcomes -- and encourages --your feedback on Google+, LinkedIn or on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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