Young adults here continue to invest despite Covid-19 pandemic

SINGAPORE – Young adults here are continuing to invest despite the pandemic, according to a survey out on Monday (July 30).

It found that 80 per cent of the around 500 youngsters surveyed are already investors while 88 per cent are considering investing in at least one product in the next year.

“The long-drawn nature of the pandemic does not appear to have dampened investor sentiment among the youth,” noted investment management firm Franklin Templeton, which conducted the survey.

Its poll asked adults from 18 years old to 35 years old a series of questions about their investments and financial habits.

It found that 37 per cent had a monthly personal income below $3,000 while 31 per cent earned between $3,000 and $5,999.

Around 80 per cent of those polled save regularly with half setting aside a monthly sum for investments.

About half of those surveyed also expect a salary increase in the next year.

The average annual investment amount among these young Singaporeans is slightly over $18,000, it showed.

About half of these investors use the dollar-cost averaging strategy, rather than putting in a lump sum.

Dollar-cost averaging involves investing a fixed amount of money into a particular investment at regular intervals.

In terms of asset allocation, 57 per cent of youth follow an approach that allocates 60 per cent of their portfolio to equities, with the remainder in fixed income products.

Ms Dora Seow, Franklin Templeton country head for Singapore, said: “From the survey results, we are heartened to see a significant number of Gen Z and millennials who believe in the importance of saving as well as investing early and regularly.

“As we navigate through a low-yield environment, young investors should diversify their portfolio to better ride out market volatility as they look to maximise returns outside of traditional asset classes such as cryptocurrencies.”

Indeed, cryptocurrencies emerged as the second most popular investment product that young adults are looking to acquire in the next year, just behind equities.

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Equity still remains the top investment choice among this age group, with 36 per cent of respondents holding stocks while 46 per cent are looking to invest in equities in the next year.

Meanwhile, 28 per cent of young investors are already investing in cryptocurrencies, while 35 per cent want to look into that asset class in the next year.

“We believe that maintaining a diversified portfolio of risk premiums, in addition to the traditional benefits of a balanced portfolio between stocks and bonds, is the most likely path towards stable potential returns,” said Mr Stephen Tong, Franklin Templeton investment solutions client portfolio manager.

“(But getting) annualised returns of over 10 per cent will include taking meaningful risks to their portfolio that comes with increased volatility,” he added.

Respondents also invested in a variety of other products, such as exchange-traded funds (ETFs), unit trusts and real estate investment trusts (Reits).

Around 20 per cent of them also used robo advisers to invest.

Ms Seow said: “We would encourage young investors to remain invested over the long term and rebalance their portfolio on a regular basis in line with their risk tolerance and investment goals as they grow through different milestones in their life.”

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