How do different generations think about money? How have Brexit and economic uncertainty affected the sentiment of investors of all ages? Hargreaves Lansdown finds out...
Looking at four generations of investors, the firm's 'Generation Invest' report investigated how each group manage their finances and unveiled their views on markets, property, the economy and Brexit.
The report looked at millennials (aged 18-35), generation X (aged 36-50), baby boomers (aged 51-70) and the silent generation (aged 71+). It was based on a survey of 2,000 DIY investors, holding accounts of Hargreaves Lansdown, along with transactional data of the firm's Vantage clients.
Here is what four generations think about property, low interest rates, Brexit and investments:
According to the report, one of the key frustrations for many younger people was getting on the property ladder, with nine in ten (86%) millennials stating they believe the housing market to be overpriced or in a bubble. Across each generation more than 70% agreed property was overpriced.
House price growth in excess of earnings, combined with more restrictive mortgage lending were suggested to be reasons for this in the report.
Yet 36% millennials were looking to use property as part of their retirement income compared with 34% of generation X and 19% of baby boomers.
Low interest rates
Generation X was considered to be the main beneficiary of low interest rates, with more than 40% of respondents saying it helped their financial situation. At the same time half of both baby boomers and the silent generation considered low interest rates to have damaged their finances.
Hargreaves Lansdown suggested this could be thanks to high levels of mortgage borrowing compared to cash savings, highlighting how this environment has helped borrowers at the expense of those with cash in the bank.
Senior analyst Laith Khalaf said: "The results show how loose monetary policy has hit the over 50s harder than their younger counterparts, as savers tend to accumulate more cash in the bank and reduce borrowing as they grow older."
"The economic effect of Brexit is also a bone of contention among the different generations", said Khalaf.
The report found short-term economic concern to be most prevalent among millennials, with seven in 10 predicting a negative effect on the UK economy in the next 12 months.
However, in the long-term all generations were more positive. The silent generation was most optimistic of all, with more than two thirds expecting a positive effect over 10 years.
Six out of ten baby boomers also felt positively about the future while millennials were split on the issue.
The report showed for each generation growth assets were considered to be an important part of the portfolio. Baby boomers and the silent generation had the highest UK equity weighting.
However, there was a clear difference in the popularity of passive funds among generations. More than 11% of millennials and 12% of generation X were seen to hold at least one passive fund, compared with 9% of baby boomers and 6% of the silent generation.
"Investor sentiment is relatively weak across the board at the moment, but the older generations are more positive about prospects for the stock market and the economy," said Khalaf.
He explained: "This may well be because they have seen times of political and economic uncertainty come and go and recognise that, in the long run, the wheels still keep turning."
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