New research suggests that some Aussies think millennials are better with money than their parents.
Forget the smashed avo cliché, many Australians think millennials are actually very good with their money. In fact, some reckon millennials are better with their funds and more likely to engage in wealth-building strategies than their parents.
Online trading provider Global Prime examined the differences in perceived financial literacy between the generations. Key findings from their research include:
- Over half of all Australian’s (57 per cent) believe millennials are more interested in trading and investing than previous generations.
- From this group, 1 in 3 (32 per cent) respondents said millennials are better educated around finance.
- Almost 1 in 4 (37 per cent) of respondents said millennials are more interested in building long-term wealth.
- One-third (32 per cent) of respondents said millennials have more time on their hands for hobbies and side hustles.
Driven to financial independence
Survey respondents put millennials more financially savvy knowledge down to the increase in podcasts and online education around financial independence. Respondents also suggested that all the recent hype around cryptocurrencies, in addition the rising cost of living and housing unaffordability has given the younger generations a stronger drive to make money earlier than their parent’s generations.
“It’s encouraging to see so many millennials and Gen Z taking an interest in investing and trading, and focusing on their long-term financial future,” says Jeremy Kinstlinger, director and co-founder of Global Prime with business partner Elan Bension. “When it comes to trading, people from any age group can find success – it doesn’t matter what age you are, what matters is whether you do your due diligence and take the time to learn about proven trading strategies before jumping straight in.”
Bension agrees: “Within our trading community, we have successful traders in their late teens and early twenties, and we’ve also got successful traders in their 70s and beyond.”
Bension says that what successful investors have in common is that they don’t let their emotions get the better of them. They also don’t get swept up in the hype of the latest trending “finfluencers” on social media.
“They do their research first and focus on learning the psychology of trading,” Bension says. “Giving themselves the best chance possible at achieving long-term success.”
Doing your research is critical in any field, but can be overwhelming when it comes to investing. Kinstlinger and Bension outline their top tips for doing your due diligence as follows:
1. Be realistic about your returns on capital
Investing isn’t a ‘get rich quick’ scheme, and often slow and steady wins the race. Do your research first and start off small. Once you build your confidence and skill take your trades to the next level.
Also, be aware of brokers offering super high leverage. If a broker is offering 500x leverage, then they are most likely profiting from your losses. They know full well that this is disastrous for most beginners, yet super high leverage is marketed as something you need to trade with. You really you don’t need it to be a successful trader.
2. Risk management is everything
If a trader goes in without a good understanding of risk management, they are more likely to lose.
Trading involves risk of capital loss, especially when trading with leverage. There are risks such as black swan events that may wipe out an entire account if the trader took on too much exposure (risk) on their account.
3. Psychology is paramount
You could have the best strategy in the world, but without the right mindset a trader is bound to lose eventually.
A trader needs to be cool and calculated and not adjust their trading based on their emotions. Unless a trader has learned to manage their impulses and emotions, they will most likely run into problems.
4. Plan your trade, trade your plan
Trading without a plan can and should be likened to gambling. Eventually the ups and downs a trader goes through will lead to poor decision making and ultimately to the loss of capital.
Having a set plan and strategy in place and journaling trades helps you stick to the plan. It means not making decisions on the fly. Knowing when to enter and exit a trade before the trade is entered – and not adjusting mid-trade – will help you to stay on track.
5. Find a trading mentor
It’s information overload online when it comes to finding a strategy to trade with. It’s tough for a beginner to sift through the information and formulate a plan. Having a great mentor can really help push a trader in the right direction. If you take the relationship seriously, you can be held accountable to your trading mentor as well. Just like with a sporting coach.
“If you are savvy about doing your own thorough research, find a trustworthy mentor and trade with a strategy in place, then you’re off to a good start” says Kinstlinger.