2 in 3 young people have not started investing

*This original article was first seen on Straits Times. We have republished it here for sharing purpose.

Lack of financial knowledge and money cited by millennials in survey

Millennials want to invest but lack the financial knowledge to do so, according to a new survey.

Around two-thirds have not started investing, said a report by GYC Financial Advisory.

Of these, 61% do not invest because they do not know how to. (Learn how you can invest successfully here)

Not having enough money to invest was the next most common reason, cited by 59%.

GYC polled about 1,000 young people from July to October last year in Singapore.

Among the respondents, almost half were between 18 and 21, and 44% were 22 to 25. The remainder were aged 26 to 30.

GYC’s primary target group were undergraduates aged 18 to 25, but it polled some people between 26 and 30 years old to see if there was any difference in responses.

Older people are more likely to invest, GYC found. Only 16% of those aged 18 to 21 invest. However, the figure rises to 41% for those aged 22 to 25.

The proportion of people investing grows to 71 per cent for the age bracket of 26 to 30 years old.

Another finding was that most investment products are out of the reach of young investors.

Among the respondents, 75% could afford to invest between $100 and $500 a month.

Most investment products, however, require “far larger” lump-sum investment amounts, GYC said.

This meant that “apart from insurance endowment products, there are not many investment products in the market for this investment amount”, GYC noted.

“Financial advisers and bank relationship managers do not seem interested in doing business with youth, likely due to the pittance in commissions they could expect to earn.”

The most popular investment product among young people was stocks, with 34% saying they would put more than 70 per cent of their money in equities.

This was followed by bonds (25%) and insurance (23%).

However, young people would probably be limited to “high-risk penny stocks”, given the small amounts they had for investment, GYC noted.

Most respondents were short-term investors, with only 11% considering an investment time horizon of 11 years or more.

Mr Aw Choon Hui, deputy chief executive at GYC, noted that to have enough funds to retire or meet major needs, investors need to start early to “allow compounding to do its magic”.

Almost 70% of respondents had a horizon of five years or less, and this “suggested an overall impatience for getting quick results instead of waiting it out for real returns”, GYC noted.

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