Millennial investors have given up on property and are targeting tech companies
PROPERTY is out of reach for many young Australians, who are now looking to sink their savings into their favourite US companies.
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MILLENNIALS are lining up to invest in overseas tech companies, after being discouraged by high Australian property prices, research has found.
Data from global investing platform Stake revealed that 56.6 per cent of users are aged between 18 and 35. Of these, 75 per cent are investing in overseas shares for the first time and 44 per cent are doing so because Australian property is too expensive.
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A whopping 85 per cent wanted to invest in technology, while 78 per cent want a slice of emerging industries and 62 per cent say Australian markets do not offer enough diversity.
Stake founder and CEO Matt Leibowitz claims the Australian market is not interesting for people under 50 years of age, who want to get behind things they understand.
“You talk on an Apple phone, you’ve got Mastercard or Visa in your pocket, Netflix at home and you use Google every day,” Mr Leibowitz said. “We are dominated by American companies and Australians are finally able to invest in what they’re interested in.”
The most popular companies for those aged 18 to 35 have been Tesla, Facebook, Amazon, Apple, Nvidia, Paypal, Netflix, Microsoft, Alibaba and Dropbox.
Stake.com.au launched in 2017 and seeks to provide direct access to US stocks, without the traditionally exorbitant fees.
“Investing was broken. Most of it was done on platforms built in the nineties during the dotcom boom,” Mr Leibowitz said. “The rest of the world had moved on so it was time investing did. There has been a growth in international investing, but through managed funds. People want to go direct these days and we wanted to build the platform.
Young investor Joe Harris, 22, has been using Stake for several months after making his first investment four years ago.
He began with Medibank and then invested in companies that dealt with China before getting involved in cryptocurrencies.
“I did well in that until my grandparents asked me about it and I thought I’d better take my money out of it,” he said.
The software engineer, who works for Atlassian, wanted to invest in the US because his favourite companies were there.
“I’m really into tech on the NASDAQ, I’m a big Elon Musk fan,” he said. “Tech companies are sexy right now and property is pretty much out of reach for all of us.”
Mr Harris said young people could relate more to modern start-ups and tech firms than traditional local investments.
“If you asked someone my age to name five tech companies that are listed, any of us could do it,” he said. “But ask us to name five mining companies with a market cap over $1 billion and we’d have no chance … non-advanced investors are going to reach for the things they feel comfortable with.”
Sam Brown, the founder of Australian-based Fintech start-up Pelikin, has also noticed young investors losing interest in housing.
“Gen Y are more interested in putting their money towards travel and experiences,” Mr Brown said.
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Meanwhile, data from global foreign exchange provider WorldFirst found that more than $39 million was paid from Australian customers in international transfers for the purpose of personal investments in 2016 and 2017; a growth of more than 16 per cent. Destinations with the biggest increases were Hong Kong (77 per cent) and the UK (73 per cent), which WorldFirst head of foreign exchange Patrick Liddy suggested may be due to the high number of expats in Australia.