Superhero, a leading share trading and superannuation platform, recently released new some intriguing insights into Australian investment habits.
Among the findings, gleaned from a survey of more than 3,700 investment clients, was the revelation that Australian women make up a larger share of long-term investors than men, with a quarter (26%) being investors for more than five years, compared with only 15% of men.
In this article, Superhero CEO and co-founder John Winters talks us through what these results tell us about the prevailing investment winds of 2022.
- Women are taking an active approach
- ESG focus from all investors
- Macro events encourage people to “buy the dip”
- An alternative to property
- What are investors’ goals and how much are they kicking in?
Women are taking an active approach
“The equality conversation is only building, and it was encouraging to see in the actual data that women are taking that active approach in growing their wealth in a space that has traditionally been so male dominated," Winters said.
“Our customer base is millennial-dominated, but it’s older millennials – women in their 30s who have been in the workforce for a number of years who have built up to a decent salary.
"This is a time when they’re looking at starting a family or they’ve got a young family and they’re looking to get ahead – that’s what the data is telling us.
“We do see, and this is no surprise, women taking a more conservative approach with their finances and really putting in place portfolios that will be there and continue to grow over the longer term.”
Women tended to focus heavily on ETFs. "Our women clients tend to prefer broad diversification across different markets – whether it’s here in Australia or in the US.
ESG focus from all investors
“They’re also investing across some big global technologies, whether it’s battery technology, or clean energy or sustainability, they’re looking at how they can invest into these themes that they’re living and breathing in everyday life as consumers of technology and energy.
"They're investing in things that they believe in and that will play a role in the future.”
That said, everyone tends to love ESG investing in the current climate. “I think the general theme across all investors is how can we invest in more sustainable companies and industries, so I wouldn’t say that ESG-based investment is gender-specific,” Winters noted.
This is true even for the traditionally male-dominated mining sector. "It’s really interesting because you’ve got this combination now with clean energy and electric vehicles, but of course then you’ve got this convergence on lithium exploration and the massive rise in lithium mining.
“You only need scratch the surface to see that all the elements that go into clean energy and companies are dug out of the ground and there are healthy returns to be made on all those various sectors that go towards that.
“The sustainable theme is definitely strong across all our customers and indeed across the market.”
Macro events encourage people to “buy the dip”
Whenever a market drops because of a macro event, such as the conflict in Ukraine, there are those investors who recognise the opportunity to pick up a bargain in that moment.
When respondents were asked how they’d feel if they checked their investments after a year and found they had fallen by 20%, more than half (53%) said they would stay the course. But a further 31% said they’d buy the dip. Only 2% thought they’d panic and dump their investment.
Winters thinks this confidence demonstrates that investors are educated about the market and their assets. "From listening to podcasts to reading the news – we know that our customers have never been so engaged with their investments which means even a dip is viewed as an opportunity,” he said.
“What we’ve seen over the last few years is that when there’s a big pull-back you’ll often see a quick reversal in the market,” Winters said. “It doesn’t always work out that way but when you’re buying an index, which is what we see through the rise of ETF investing, that’s where people really see the opportunity.”
Another reason for the uptake in investment is the notion that, with inflationary pressures bringing the next interest rate hike closer, there is a need to shore up capital. “I think investors realise that holding cash these days is not enough to get ahead,” Winters said. “Interest rates are still lower than the rate of inflation, so if you’re holding cash you’re going backwards.”
“The market has been digesting the prospect of higher interest rates for some months and we’ve seen a big jump in the US markets following the interest rate rise over there.
"This is not ‘how do you shoot the lights out and make 20 or 30 per cent’, it’s about how you protect your capital in this sort of environment.”
An alternative to property
Men made up the bulk of the company’s new investors, with two in five (41%) only starting to invest in the last six months.
There was a distinct increase in the number of new Australian investors, with 35% of the 18-to-24-year-old demographic cutting their teeth as investors in the last six months.
“Investing as a concept has grown tremendously in popularity over the last year or so. I see it as a major generational shift we’re seeing, whereby everyone is sitting up and starting to take notice," Winters said.
An overcooked property market hasn’t hurt the stock market either. “In general people are looking for ways of growing their wealth in ways other than through property, and given that property prices have moved so quickly, it’s a question of how to catch up when you’re looking to put down a deposit,” said Winters. "People are looking at how they can invest or save their money somewhere that’s going to generate healthy returns.”
Unsurprisingly, older Australians are the most experienced with nearly half (47%) of over 55s stating they’ve invested for more than five years.
What are investors’ goals and how much are they kicking in?
Superhero’s research looked at why its clients had started investing. A universal response was to turn money into money, with half of those surveyed indicating this as a response. Other priorities included building a nest egg (14%), diversifying assets (18%), retiring early (11%) and saving for a property deposit (7%).
Respondents were looking to sink larger amounts into the market in 2022, with almost a third (29%) saying they’d like to invest more than $20,000 – in direct contrast to the 4% who said they were looking to invest less than $1,000 in the coming year.
A fifth of female Superhero customers indicated that they would like to invest more than $20,000 in 2022. Interestingly, the over-55s were most likely to invest more than $20,000, with 38% of that demographic indicating this was their intention.
“2022 is shaping up to be a big year for investing. Our customers are looking to invest significantly and use the year to build their wealth – and they’re quickly realising that investing in shares is a smart way to grow wealth sustainably,” Winters said.