Three trillion reasons why young investors need to be taken seriously

A generation of investors that are possibly more astute than given credit for…

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It’s no secret that investing in great companies is a powerful tool for building wealth. Over the years, it has generated trillions of dollars in returns for investors of all ages. However, there is one group of investors that is often overlooked by the establishment: young people. Even today, some brokers and financial advisors see young investors as naive and inexperienced.

Being relatively fresh behind the ears itself, the Australian investing platform Stake is empathetic on the dismissal of the next generation. Though, it believes the cohort is too important to ignore, and here’s why…

Young investors are learning the ropes

The lay of the financial land in recent years has prompted young people to take charge. Measly interest accrued on savings and the elusive property market has widdled away a new generation’s options for financial freedom.

In response, hundreds of thousands of fresh new faces have arrived in the Aussie share market over the last two years. Comments concerning the next generation of investors were made during a discussion held at the Stockbrokers and Investment Advisers Association last week.

[T]hey might be naive and uneducated at the moment, and [there’s] lots of choice and multiple platforms at the moment. But they will become sophisticated at one stage and that’s where it’s our role to step up and educate them and take them on the journey.

Candice Bourke, Shaw & Partners

However, Stake chief marketing office Bryan Wilmot rebutted, stating that young investors are taking education into their own hands.

What we should be doing is encouraging more people to take control of their financial security and financial future and not just dismissing them. They’re genuinely curious people, and they’re genuinely educating themselves and I think that’s a fantastic thing.

Though, Bourke highlighted that the demographic will become an increasingly important one. A $3.5 trillion passing on of wealth will take place between baby boomers and young investors over the next decade.

Breaking stereotypes

While the proliferation of ‘meme’ stocks, including Gamestop last year, portrayed the next generation of investors as nonsensical speculators, there is data that suggests otherwise.

According to Betashares assistant portfolio manager Jessica Leung, young investors applied sound portfolio construction. To demonstrate this, Leung notes the broad-based Betashares NASDAQ 100 ETF (ASX: NDQ) and the Betashares Australia 200 ETF (ASX: A200) as two cornerstone investments.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has positions in and has recommended BETANASDAQ ETF UNITS. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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