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Are millennials repeating baby boomers mistakes?
With the ongoing ‘retirement crisis’, young people in Australia need to learn early on how to invest and save for their ‘comfortable retirement’ in order to avoid the mistakes made by baby boomers who now face rather pessimistic financial prospects at retirement, according to Equity Mates Investing Podcast.
Young Australians should be better educated and encouraged to save and invest to ensure their own comfortable retirement which according to estimates from the Association of Superannuation Funds of Australia (ASFA) stood at $545,000 for an individual and at $640,000 for a couple.
However, the reality was out of 439,000 baby boomers who were expected to retire in 2019 and the majority of them were not prepared to support themselves in retirement, with 60% expected to run out of money before they would die.
Further to that, the average Australian would outlive their retirement savings by five years, according to Equity Mates co-founders Bryce Leske and Alec Renehan.
The retirement crisis would be expected to unfold over the next decade during which around 3 million of baby boomers would be retiring, putting a strain on the public health system, public housing and the government’s budget surplus.
Therefore, according to Equity Mates, it would be critical for young people to learn how to put their money into the stock market rather than saving it in cash, given that between 1900 and 2010 the Australian stock market saw 11.8% growth per year while, at the same time, Australian bonds returned 6% and saving in cash stood at 4.8%.
According to Leske, nothing created “more wealth for more people than the share market”.
Despite that, the generation that grew up after the Great Financial Crisis (GFC) preferred to save their money in cash, with more than 40% of working millennials admitting that they were not invested at all.
“There are so many barriers to getting started investing. From all the industry jargon to a sensationalised financial media, it was daunting to get started. So, for years, I didn’t,” Renehan said.
“Once you break through these barriers and get started, you understand just how important investing is for your financial future.
"… we hope to introduce more young Australians to the great wealth creating machine the world has ever known. In doing so, hopefully this generation will be better prepared for retirement than their parents and grandparents generations.”
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TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
32.68 3 y p.a(%)
2
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.72 3 y p.a(%)
3
Spire Oaktree Opportunities XI First Close USD
31.36 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
29.60 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
27.64 3 y p.a(%)
As long as the millennials do not invest with a typical retail fund then they should be OK !!