Gen Z 'lucky' when it comes to investing

When it comes to investing, I like to think of Gen Z as well positioned to be considered a “lucky generation” if they continue with their great investing habits.

They have time on their side, they understand investing is about growing their wealth over the long-term and many are regularly contributing to a retirement account, such as KiwiSaver here in New Zealand. It’s great to see.

The youngest members of Gen Z are in their early teens but the oldest are studying or working, many of them well into a career.

For those that are working, many are on contract or freelancing. That offers opportunities and challenges – particularly given the higher cost of living.

Using the age group 18 to 24 as a proxy for Gen Z, ANZ Investments here in New Zealand surveyed KiwiSaver investors and found that:

·         25 per cent had increased their KiwiSaver contribution level in the previous twelve months,

·         12 per cent had reduced their contributions,

·         14 per cent stopped their contributions,

·         26 per cent had made additional voluntary contributions,

·         23 per cent changed KiwiSaver provider,

·         10 per cent changed fund/investment type,

·         and 9 per cent had withdrawn funds to purchase their first home.

Our survey, by Horizon Research, also asked KiwiSaver members whether the fall in financial markets had left them more or less likely to invest.

28 per cent of 18 to 24-year-olds said they were less likely to invest. This compared to 20 per cent of all KiwiSaver members.

However, 26 per cent of the 18 to 24-year-olds said the fall in financial markets had left them feeling more likely to invest, compared to 10 per cent of all KiwiSaver members who were surveyed.

What leapt out at us was that 20 per cent of 18 to 24-year-olds said they were already wary of investing; and 24 per cent of all members said the same.

"It’s understandable if people become nervous when markets fall, as they did late last year. So, it’s important for people to focus on their long-term investment goals - not the day-to-day headlines."

Fiona MacKenzie - Managing Director of ANZ Investments
 

The survey results are a reminder to all KiwiSaver providers and others in the financial services sector of the importance of ongoing education about investing for the long term.

ANZ Investments’ customer data shows 63.8 per cent of our members aged 18 to 25 made an employee contribution into their KiwiSaver account in April.

Looking wider to include all Gen Z members (born 1997 – 2012) 46 per cent are making regular employee contributions.

That compares to just over 54 per cent of all KiwiSaver members and 63 per cent of members aged 18 – 65.

Just over 6 per cent of members aged 18 to 25 made a voluntary contribution in April of this year.

That compares to 9.2 per cent of all members who made a voluntary contribution in April.

Those are encouraging numbers.

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Some of those contributions will have been made by members who might be studying or are at home, but still want to contribute to their retirement savings.

As well as contributions it’s also important for investors to think about what sort of fund they are in.

Of the ANZ KiwiSaver members aged 18 – 25, 78 per cent are in a growth fund.

Growth funds invest mainly in assets like shares and property, which can have a higher level of risk. That means they’re more likely to fluctuate in value in the short term. However, they typically deliver higher returns over the long term.

To help connect with younger investors ANZ Investments is launching a series of social media videos, discussing basic investment topics.

Social media platforms like TikTok and Instagram are where many get their information and we’re aiming to give them simple and useable information in ways which best suit them.

The findings of the survey by Horizon Research are based on an online survey of 1,632 respondents, representing the New Zealand population, aged 18 years and older. There is a margin of error on the overall sample of plus or minus 2.4 per cent.

This article is for information only and is not intended to be financial advice.

ANZ New Zealand Investments Limited is the issuer and manager of the ANZ KiwiSaver Scheme, OneAnswer KiwiSaver Scheme and ANZ Default KiwiSaver Scheme.

A copy of the ANZ KiwiSaver Scheme and OneAnswer KiwiSaver Scheme guide and product disclosure statement is available at anz.co.nz.  The ANZ Default KiwiSaver Scheme is closed to new members.