Financial advisory company Findex has five recommendations for Gen Z Australians to help them build wealth.
The recommendations follow a survey conducted by Findex that found the majority of Gen Zs consider bank savings the most important wealth-building investment.
Gen Zs were born between 1996 and 2010. That means the eldest of this cohort is 28-years-old and the youngest is 14-years-old. (The Findex survey was limited to Australians aged 18-64 years).
About 38% of Gen Z respondents nominated bank savings as their first choice for building wealth. This was followed by property at 25%, superannuation at 13%, and exchange-traded funds (ETFs) at 7%.
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5 tips for Gen Zs to build wealth
Findex recommends the following key investment actions for Gen Zs to ensure a good retirement.
Assess your risk appetite and investment diversification
Exploring options within superannuation that align with a longer investment timeline can enhance growth. Findex says superannuation typically defaults to 'balanced' options, so younger generations might benefit from 'growth' strategies, aiming to optimise fund performance over time.
Each superannuation fund offers a variety of strategies to suit customers based on their age and risk profile. Young investors often prefer growth strategies because they have time on their side. Therefore, they can tolerate higher risk for higher reward.
Growth funds are mainly invested in ASX shares and international stocks. As we recently reported, data and analytics provider Chant West says 'all growth' superannuation funds are performing best in the 2024 financial year to date, with 9.8% returns so far.
Early engagement with superannuation to build wealth in retirement
Start contributing to superannuation as early as possible, says Findex. Even modest contributions can grow significantly over time due to the power of compounding interest.
Findex co-CEO Tony Roussos encourages Gen Z Australians to, "Take advantage of the time you have on hand by exploring ways to build your balance so that your super works hard for you in retirement."
The Australian Government introduced superannuation in 1992. The Superannuation Guarantee paid by employers has risen from 3% of wages in 1992 to 11% today. It goes up to 11.5% from 1 July this year.
Financial literacy and digital tools
Leverage digital platforms like Young Money from the Findex Community Fund for financial education, and apps to help with budgeting and investment tracking. Findex says understanding the basics of superannuation, investment strategies, and tax advantages is crucial to building wealth.
Talk to your family
Findex says parents and grandparents can provide a guiding hand. Nearly half (47%) of Gen Z say they better understand how to manage and reduce debt through financial conversations with their family.
Leverage family advice relationships
Financial advice may not be affordable at this age. If your family uses a financial advisor, see if you can sit in on meetings and start learning about the ways they can assist you in building wealth.
