Nearly half of millennials say they would prefer to invest rather than spend, new research finds, as the market braces for a generational shift

Nearly half of millennials say they would prefer to invest rather than spend, new research finds, as the market braces for a generational shift
Nearly half of millennials say they would prefer to invest rather than spend, new research finds, as the market braces for a generational shift. Photo: Getty Images
  • Some 43% of millennial Australians would rather invest in the sharemarket than spend, new research shows.
  • The finding reflects upward user activity, as the generation accounted for 63% of the CommSec accounts opened during the pandemic.
  • Millennials are also increasingly eager to talk about it, alarming regulators as unlicensed financial advice swarms social media.
  • Visit Business Insider Australia’s homepage for more stories.

The pandemic has seen millennial Australians turn to the sharemarket in droves. Now, nearly half of the generation foiled from the housing market is more interested in generating wealth than it is in spending it.

The results of a new survey released by the Commonwealth Bank of Australia found that as many as 43% of millennials now favour investing over spending, contrary to narratives that paint them as debased financial illiterates with a penchant for wasteful spending.

It’s a finding that mirrors striking upward user activity on the bank’s share trading platform, CommSec, where more than 1 million accounts have been opened since the pandemic hit Australian shores in late-February last year, some 63% of them millennials.

CommSec’s executive general manager Richard Burns said he wasn’t surprised by the findings, considering how much millennials have driven user growth over the last two years.

“We are seeing a behavioural shift from this younger demographic of investors,” Burns said.

“Seventy-one percent are using CommSec’s mobile platforms for trading and there is strong demand for global exposure with Exchange Traded Funds (ETFs) and International equities proving to be a popular starting point for investment,” he said. 

“Female investors are also growing in number and increasingly turning to CommSec Pocket to start their investment journey, accounting for 44% of total new account openings, up from 31% pre-COVID.”

Outside of the CommSec ecosystem, women have rushed into various other corners of the market over the last 12 months as well, flooding into ETFs at a rate close to men. 

Data released in August found that women have led the millennial pack on ETF uptake in Australia, where the generation accounts for nearly half of all investors, and has driven a fast-growing $116 billion market outpacing the rest of the world. 

The research, released by investment house State Street Global Advisors, found that women make up about 25% of the Australian ETF market, up from the 10% share they held 20 years ago, and are expected to reach parity within the next five years. 

COVID-19 has marked a coming of age for the millennial investor, which has roughly doubled its market share over the last 20 years, accelerated in the last 12 months as the pandemic flooded the market with cash.

Millennials have been vocal about it, too. According to CBA, 86% of millennials want to have more open discussions about how they invest their cash, of whom 50% are most interested in talking about stocks specifically, while 43% said they want to hear more about super.

The trend is no secret, and has become a bugbear for Australian regulators through the pandemic investing rush, as unlicensed financial advisors — or, “finfluencers” — have taken to social media platforms like TikTok in herds.  

As a result, some trading platforms have called on others to take the initiative to offer young, often first-time investors more in the way of educational resources. Superhero founder John Winters said education has become a “major piece” of the platform’s short-term plans.

“We have started to lift the content side of things. We’re trying to give people digestible information through our social media channels, and we’ll see that further integrate right throughout our app as well in the coming weeks and months.”

Winters said he bases the platform’s success off that of its customers, and pointing them in the direction of authoritative resources has become a big part of it. It’s more than he could say of how “some of our peers have built their businesses.”

“I think there’s a very big generational shift happening — probably one of the biggest in our lifetime,” he said. “It’s bigger than one company; it’s bigger than one industry. It’s up to all of us, if we’re in this space, to be leading the way on financial literacy.”