Australians are continuing to chip in to the market with many doubling down on their investments despite global uncertainty, the war in Iran and fuel shortages.
Data from micro-investment platform Raiz, which is used by about 350,000 Australians, shows total deposits in March have increased 7 per cent over the year with average deposits per user rising to $300, suggesting many are ramping up their exposure to markets in the face of uncertainty.
Even some of the youngest and newest investors in the country are unfazed and eager to buy as markets have dipped.
Sydney-based university student Arjun Singh, 18, who began investing in the past year and has created a website to help friends looking into investing, has not been spooked by the recent volatility.
“I saw [the volatility] as more of a short-term thing, so I didn’t respond very much to it,” he said. “I put more money into some American exchange-traded funds after they dropped because I knew they would come back up, and they have.”
Singh said he has one account dedicated to slow-steady growth through exchange-traded funds and another smaller one for experimenting with more volatile stocks.
Younger investors got on board with ETFs really early, and so their default position when the market falls is to buy an ETF.
Gemma Dale, nabtrade
“A percentage of my paycheck goes into the longer-term one, and I just leave it there,” he said.
Raiz chief executive Brendan Malone said one of the most striking findings from reviewing the company’s data has been the surge in 18 to 24-year-old investors, with the user base of those in that age group jumping nearly 27 per cent to 23,800 active investors on his platform.
“A lot of young Australians have looked at the housing market and decided the deposit dream isn’t worth chasing right now,” he said. “What’s interesting is they’re not spending that money, they’re investing it.”
While Canberra-based intelligence officer Holly Nebauer, 31, has already bought a home, she said beginning to invest when she was 22 helped her get into the property market.
Now, she is saving for a family trip, investing $55 a week since her three-year-old daughter was born, with the goal of cashing out to go to Disneyland when her daughter turns 10.
“That’s assuming that I make 0 per cent returns, but I’m on track to have $47,000 in the account by the time she turns 10,” Nebauer said. And recent market volatility has not discouraged her from continuing that approach.
“If anything, I’m leaning into it and thinking, ‘should we be investing more?’” she said. “The market might dip further, which is obviously always a risk, but if I’m looking at the long-term goal, then that just doesn’t really matter.”
Gemma Dale, director of SMSF and investor behaviour at online stock-trading platform nabtrade, said some of the highest volume trading days she had seen were when markets dipped because of events such as the closure of the Strait of Hormuz, Liberation Day and COVID.
“It tends to result in far more stock-specific activity with older investors [over 40] and far more ETF activity with younger investors,” Dale said. “Younger investors got on board with ETFs really early, and so their default position when the market falls is to buy an ETF, and not specific stocks.”
However, Dale noted that trading activity after consecutive days of market falls often slowed as investors lost steam. “Younger people in particular have got a finite amount of money to invest,” she said.
Samy Sriram, market analyst at trading platform Stake said she has seen similar trends at her company where the largest growth in new accounts is among Gen Z investors.
“Gen Z is entering the market carefully and consistently, and almost exclusively in index funds,” she said, while Millennials appear more comfortable being exposed to more volatile plays.
While younger generations, who are often facing the brunt of cost of living pressures, might be less willing to make targeted bets on certain stocks and individual sectors, Sriram said they were continuing to buy broad market index funds, be more disciplined with their investing, and ramp up their buying activity even when markets fall.
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.
Millie Muroi is the economics writer at The Sydney Morning Herald and The Age. She was formerly an economics correspondent based in Canberra’s Press Gallery and the banking writer based in Sydney.Connect via X or email.