In just over two months from now, the oldest millennials will be turning 40.
It's an interesting milestone in the sense that parts of what some still refer to as the "younger generation" are not so young anymore.
In fact, many older millennials may have already been working for more than 20 years, as opposed to those at the bottom end of this generational cohort who are still aged in their early twenties.
The widely accepted age definition for millennials (also known as Gen Ys) covers people born between 1981 and 1996, making the youngest 24 years-old. Next year, they'll be turning 25.
Because of this wide age variance, there is likely to be a large variation in accumulated investment wealth across the millennials spectrum.
Where this all comes together from an investment perspective is in recent research conducted by Vanguard in the United States.
Vanguard surveyed more than 850 millennials in the U.S. currently aged 24 to 39, who make at least US$50,000 per year, as part of a broader study on how people across different generations feel about retirement, investing, and financial advice during market volatility.
The survey was active during May – the period when financial markets were staging a strong recovery after their sharp falls in February and March.
The events during the first quarter would have been the first experience for many millennials of a major correction on equity markets.
When describing their feelings towards investing at the time of the survey in May, almost half of millennials said they were cautious (46 per cent), and used words such as fearful (28 per cent), and sceptical (27 per cent).
This compared with before the COVID pandemic when millennials were understandably less cautious (32 per cent) and had a much higher leaning towards other words such as optimistic (29 per cent), and motivated (23 per cent).
That said, 74 per cent said they were interested in learning more about investing. That included 43 per cent who said they were somewhat interested, and 32 per cent who were very interested.
Vanguard's U.S. research ties in with the findings from the recently released 2020 ASX Australian Investor Study.
The ASX found that over the next few years the number of younger Australians actively investing will continue to rise. Intending investors have an average age of just 34, with 27 per cent aged under 25.
Among the "next generation investors", as the ASX refers to them, 41 per cent list building a sustainable income stream as their top investment goal. Maximising capital growth was the next highest selection (25 per cent), followed by achieving a balance between capital growth and investment risk (16 per cent).
On paper, the millennials generation is a long way from retirement.
But the reality is that a high percentage of millennials are actively thinking about retirement.
More than six in 10 U.S. millennials (61 per cent) said they plan to retire before age 65, and 22 per cent plan to retire before age 60.
According to the Australian Bureau of Statistics, the average retirement age in Australia is 55.4 years.
Nearly two-thirds (63 per cent) of those surveyed by Vanguard defined a successful retirement as being able to do what they want when they want.
That loosely fits in the Association of Superannuation Funds of Australia's "comfortable lifestyle" retirement standard, which factors in the ability to enjoy a good standard of living and make regular discretionary purchases.
ASFA's current budget calculations are that a single would need $43,687 a year to live a comfortable retirement lifestyle, and a couple $61,909 a year.
Almost 70 per cent of the U.S. millennials surveyed were confident they were putting away enough money to be financially secure in retirement.
However, once they reach retirement age, 39 per cent said they intended to pursue a new career at "retirement", and 35 per cent planned to start a business.
The top reason for planning to continue to work was "to stay active and alert" (50 per cent), followed by "I enjoy what I do" (46 per cent), and "to have a sense of purpose" (43 per cent).
There's no doubt that when it comes to both investing and retirement, there's a lot of diversity across the millennials generation.
Older millennials, certainly in some cases, will be actively thinking about retirement already because they may even be considering retiring within the next 20 years.
Many will already own a home, have a family, and will have had the benefit of close to two decades of accumulated investment returns.
Younger millennials, on the other hand, may only be taking the first steps in their career, have limited assets, and have different investment objectives to their millennial elders.
Yet there are likely to be many commonalities, especially given the fact that almost three-quarters of the U.S. survey respondents, covering millennials of varied ages, said they were keen to learn more about investing.
In Australia, that relates back to around 70 per cent of next generation investors wanting to build sustainable income and maximise capital growth.
Yet, irrespective of generation, the fundamental principles around investing remain the same.
They revolve around setting appropriate investment goals that are measurable and attainable; having a well-diversified asset allocation strategy; controlling investment costs to maximise returns; and maintaining perspective with patience and discipline, regardless of short-term events.
Senior Personal Finance Writer
27 Oct, 2020
BEc (Acc), MBA, CPA, FFin
David has been in the Financial Services Industry for nearly 30 years. He was one of the founding Directors of the successful Financial Planning and Stockbroking Practice, Henderson Gregory Forrest, for a decade. Prior to that, he held senior roles in companies such as ING, KPMG Accountants and AMP. David was previously Chairman of OAMPS Superannuation Trustee Board and currently serves as an independent Board Director for several companies.
David’s extensive experience in all forms of superannuation, including Self Managed Super Funds (SMSF), Defined Benefit Funds, retirement funding through Account Based Pensions, stockbroking with a focus on Direct Share Investment, Taxation/Remuneration Planning, Centrelink, Aged Care and business management, equip him to advise expertly on all aspects of Financial Advice.
Those with a particular interest in superannuation/SMSFs, direct share investment, salary packaging or applying for the Centrelink Pension will find his knowledge and ability in formulating and implementing creative, logical and simple wealth creation strategies a valuable asset.
David maintains a strong personalised client service focus, providing tailored solutions for clients.
David Forrest is an Authorised Representative of Integrity Financial (SA) Pty Ltd ABN 16 133 921 187 — AFSL No 334846
Business Finance Manager
B Bus (Acc), CPA
Michelle’s career has spanned across the Financial Services, Retirement Living and Aged Care industries working in the private sector, not for profit and more recently with the state government for over 20 years. Her experience extends to many facets of the financial services industry, having worked in superannuation administration, technical support and financial planning practice administration.
Commencing with AMP and subsequently working in commerce and accounting roles with companies such as Brambles, Adelaide Bank Retirement Services, ECH Inc and SA Health and Wellbeing, Michelle returns to financial services after working in practice financial management at Henderson Gregory Forrest. This wide range of experience from senior accounting and management roles has provided Michelle with a strong background in business administration.
With an astute financial acumen and keen interest in business improvement strategies, Michelle ensures the smooth running of the Integrity Financial Advisory practice providing valued management support to our personalised client service focus.
B Com, Dip FP
Darren joins the Integrity team as a strong technical specialist with almost 20 years’ in the Financial Services industry. He has extensive experience advising clients on how to build and protect wealth, prepare for retirement and retire comfortably.
Commencing with advising clients on direct equities for over 10 years at Baker Young, Tolhurst Noall, and ABN AMRO Morgans, his career expanded to providing holistic client advice, having operated his own financial services licence and company. Most recently having worked for a 'Big 4' bank, he has welcomed the more personalised ‘client first’ approach that is evident at Integrity Financial Advisory.
With a deep understanding of investment markets, he is appropriately qualified and authorised to provide direct share advice, as well as superannuation/SMSF advice, encompassing both investments and insurance.
Meticulous in his approach, he aims to deliver quality outcomes for clients by understanding their financial situation and needs before providing advice which is central to our advice process. Darren supports David in tailoring solutions for all client financial advice needs.
Darren Chalk is an Authorised Representative of Integrity Financial (SA) Pty Ltd ABN 16 133 921 187 — AFSL No 334846
Client Service Manager
Natasha commenced working in the financial services industry in June 2008 and is a new addition to the Integrity team. During the past 11 years, she worked closely with advisers providing administration support in a share broking and financial advice business.
Having successfully completed her RG146 accreditation in securities and managed investments and continued her studies to complete her competency in Superannuation, Natasha can ably assist with all aspects of fixed interest, cash management, portfolio administration, direct shares and client advice implementation.
Natasha takes time to ensure she understands our client’s financial goals and needs and believes in creating, preserving and utilising wealth through effective financial management as a key objective in helping clients.
Client Service Manager
Kelly has worked in the Financial Services Industry for over 10 years and has supported David since 2013. Kelly’s primary background is in customer service and administration.
On starting in the industry, Kelly initially focused on direct shares, stockbroking administration and client liaison. Since moving to the Client Service Manager role, Kelly has developed skills encompassing all aspects of financial planning including client advice implementation and term deposit management.
Kelly’s experience in the direct share environment, especially management of estates, provides a key part of the direct equity expertise in Integrity’s Client Service Team.
Returning from Parental Leave following the arrival of her second child, Kelly has developed further honed multi-tasking skills after juggling the demands of a growing family.
Client Service Manager
Jasmine has worked in the financial services industry for over 12 years in all areas of client administration, working with David since 2013.
Jasmine has extensive knowledge and experience in client service including implementation of advice, portfolio reporting, assisting with the establishment of Self Managed Super Funds (SMSFs), term deposit management and a long history of helping clients with their enquiries.
Jasmine’s attention to detail, yet gentle approach, means she is able to solve the trickiest of questions for our client community.
Jasmine has gained her Certificate III in Financial Services qualification.
Client Service Manager
Merrilyn has worked in the financial services industry for over 11 years in all areas of client administration, and is a new addition to our client services team, returning from Melbourne to join the team in June 2019.
Merrilyn has extensive knowledge and experience in client service including implementation of advice, managed fund administration, assisting with the establishment of Self Managed Super Funds (SMSFs) and process improvement for the previous practices she has worked with. Merrilyn’s experience with direct shares constitutes the other part of our administrative support for direct equity investments.
Merrilyn’s warm and caring nature continues to endear her to our clients and she has already established herself as a valued member of our team.