Three-quarters of Australians have never invested in shares
The reason? Most Australians say they simply can't afford it.
Despite appearing relatively mainstream, three-quarters of Australians have never invested in or traded shares, according to new research by finder.com.au. However, the reason for this is perhaps not what you might think.
Rather than being confused by the process or not knowing how, the main reason Australians aren't dabbling in shares is simply because they can't afford it. For 39% of survey respondents, not having the spare cash was the reason they haven't yet invested in shares. In comparison, only 4% of Australians say they haven't invested in shares because they're afraid to, and only 12% say they don't know how. These figures of course don't take into account share investments held through superannuation.
While the number of Australians overall who have invested in shares is quite low, it's even lower when you only look at women. Only 17% of Australian women have invested in shares, compared to 35% of men.
Interestingly, 3% of Australians have engaged with robo-advice platforms like Acorns and Stockspot. This might seem like a small chunk of the population, but considering how new these products are and how many Australians haven't even invested traditionally on the ASX, it's quite significant. Consumers, particularly millennials, have been attracted to these platforms as they have low barriers to entry, are easy to use and their investment are managed for them.
A study released in May this year by robo-advice platform Stockspot found over half of Australian parents feel they can't invest in a share portfolio for their children because they lack the funds. Stockspot's report found that if parents were to start saving for their kids, 68% would opt for a traditional bank account while only 13% would start a share portfolio.
CEO and founder of Stockspot Chris Brycki said that Australian parents who avoid investing in shares will miss out on the benefits of compound returns. “An investment of $2,000 in a high-growth portfolio and regular top-ups of $100 a month at an average after-tax return of 7% per year would result in $60,000 in 20 years. This is compared to today’s average bank interest rate of less than 2%, which would achieve only about $32,500," he said.
"Digital investment services can now spread investments across thousands of companies from Australia and around the world to reduce risk. It’s never too early or too late to start saving and investing. Technology has made saving and investing easier than at any other point in history," said Brycki.