Planning your retirement? Here are the most popular investments outside superannuation

Research shows bank savings, property, cash and shares are popular investment choices outside superannuation.

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Whilst one in four Australians rank superannuation as the most important investment vehicle for retirement and long-term wealth building, 85% are actively investing outside their super funds.

So, how are Australians investing their spare cash?

In this article, we take a look at the most popular investment options identified in a new survey.

Research by financial advisory Findex shows the most common investments Australians have outside their superannuation are bank savings (64%), property (38%), cash (35%), and shares (34%).

Other investments include exchange-traded funds (ETFs) (17%), cryptocurrency (17%) and bonds (6%).

Findex says the range of investment options adopted indicates "not only nuanced preferences and risk appetites but a preference for liquidity and risk aversion among a significant portion of the population".

When the data is broken down by generation, we see different investment strategies at work.

Generational differences in preferred investments

Here is a summary of how investment choices outside superannuation differ between the generations.

Baby Boomers (born 1945-1964)

Baby Boomers prefer to invest in bank savings (60%), property (50%) and shares (46%).

Gen Xers (born 1965-1980)

Gex Xers like bank savings (57%), property (43%) and shares (36%).

Millennials (born 1981-1996)

Millennials prefer bank savings (70%), property (41%), cash (35%) and shares (33%). Interestingly, the survey shows this age group is the biggest player in five different categories of investments. They are bank savings, as stated; cryptocurrency (22%), ETFs (21%), managed funds (15%), and bonds (8%).

Gen Zs (born 1997-2009)

Gen Z is the biggest investor in cash (42%) and the second biggest investor in bank savings (66%). They also like shares (22%), ETFs (17%), property (14%) and cryptocurrency (13%).

Investing in ASX shares during retirement

Most superannuation funds primarily invest in ASX shares and international equities like US shares.

Individual Australians can do the same thing outside their super by setting up a brokerage account and buying shares with their own funds.

Investors in retirement typically want to maximise their passive income by owning preferably fully franked ASX dividend shares.

Some of the most popular ASX dividend shares include the big bank shares, such as National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC). Income investors also like the big mining stocks, such as Fortescue Ltd (ASX: FMG) and BHP Group Ltd (ASX: BHP).

Ray David from Blackwattle Partners says ASX 200 mining stocks present more of a buying opportunity today than bank stocks, which have had a significant run of share price growth since last November.

Motley Fool contributor Bronwyn Allen has positions in BHP Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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