Why young investors are more risk averse

The ranks of young Australian investors have swelled over the last two years. And many have very different investment objectives and strategies to older investors.

Young Australian investors aged 18 to 24 are likely to be more risk averse than their older counterparts and least likely to tolerate moderate or high variability in their investment returns.

These are among the key findings from the just-released ASX Australian Investor Study 2023, which also found that the main investment goal for 36% of “next generation” investors over the next 12 months is to build a sustainable income stream.

Why young investors are more risk averse

The ASX study findings are based on a survey of 5,519 Australian adults conducted by Investment Trends in November 2022.

Interestingly, only 17% of retirees (aged 65 and over) listed building a sustainable income stream as their main goal over the next year. Their biggest focus (nominated by 20% of the retirees who participated in the ASX study) is to protect their existing investments and income against markets falls.

Only 9% of next generation investors nominated this as their main goal, with maximising capital growth the top consideration for 19% of respondents in this young adult age band, followed by achieving a balance between capital growth and investment (nominated by 14%).

Profiling the next generation investors

The ASX’s study found that almost 10% of Australia’s 10.2 million investors fall into the next generation age category, and 63% of these have only started investing in the last two years.

The Next Generation Investor

Average Age


Median Portfolio Size





Say they are diversified


Average number of products held


Prefer stable, reliable returns


Informed by family and friends


Prefer YouTube videos to learn about investing

Investment Holdings



Hold Australian shares


Invest in ETFs (exchange traded funds)


Own cryptocurrency assets


Hold international shares

Source: ASX Australian Investor Study 2023

While many next generation investors are focused on building sustainable income, the ASX study found that returns are less motivating for younger investors than for older demographics when making investment decisions.

Next generation investors rate risk (33%) and their personal circumstances (29%) above returns (25%) as their most important considerations. They also consider whether funds can be accessed at any time if their money is tied up (20%).

This makes sense given younger people typically will want to access their funds over the shorter term for lifestyle purposes, including for travel or to use investments as a deposit to buy a home.

Next generation investors are least likely to tolerate moderate (16%) or high variability in returns (10%).

The majority understand the cyclical nature of investing, with 29% saying a fall of 20% in their portfolio balances is a risk they understand could happen and another 36% saying if this happened, they would be concerned but would wait to see if the situation improved.

But the ASX study notes that the apparent financial conservatism of next generation investors is at odds with their level of investment in cryptocurrency assets.

“This product at present could be seen as a relatively risky investment, yet 31% of next generation investors hold it in their portfolios. Their median holding is $2,700, representing 6% of their total portfolio (compared to 3% for all investors). It possibly appeals to their excitement about new technologies or a desire to do things differently to their parents.”

Less likely to be diversified

Another key finding from the ASX study is that next generation investors report the lowest level of investment diversification among all age groups and are the least knowledgeable about diversification.

Portfolio diversification by age


Have Diversified Portfolio

Don’t Have Diversified Portfolio

Don’t Know

Next generation (18-24)




Wealth Accumulators (25-49)




Pre-retirees (50-64)




Retirees (65+)




Source: ASX Australian Investor Study 2023

Next generation investors on average have investments in 3.1 products, with one-third holding ETFs.

The ASX study points out that their diversification level is most likely due to the short amount of time in which they have been able to invest and their generally low incomes given many are at the start of their careers.

The low levels of diversification among next generation investors may also be counter-effective against their relatively high level of risk aversion.

As such, this suggests many young investors may benefit by learning more about the role of diversification in mitigating risk and in helping to stabilise returns when investing across a range of asset classes.

The ASX study found that social media is an emerging source of investment information for younger investors, with 43% also typically consulting their family and friends, 22% the ASX website, and 21% online broker websites.

Source: Vanguard June 2023

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2023 Vanguard Investments Australia Ltd. All rights reserved.


Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Share this post


Authorised Representative 298494
Interprac Financial Planning Pty Ltd 

Darryl Jopling

Senior Adviser

I have worked in the financial services industry since 1982 and as a Financial Adviser since 1999.

I have worked for large Financial Planning businesses, Membership based organisations and looked after the financial planning needs of clients within an Accounting Practice before starting my own business.

I am married, have 4 older children and a grandson and I am keen golfer with mixed results like many .

I have been through many of the strategies I talk with clients about myself and with my family.

I have been through the journey of seeing my parents move into Aged care and negotiated the difficulties and pitfalls of understanding the system for them and this gives me an excellent insight into what is required to assist families at this difficult time.

In a previous roll I used to run retirement seminars looking at Centrelink and Retirement Incomes and how to make these work for you. I have helped many of my clients with Aged Care advice when their parents needed to move into Nursing Homes. For many clients I assist them with superannuation, building wealth and protecting their loved ones with insurance.

I am supported by his, Licensee, Interprac Financial Planning’s in-house resources and ongoing technical, systems and training.

I am committed to understanding your needs and identifying strategies and products to help you achieve your goals.

My guiding principle as an Adviser is to design plans which help to provide my clients with clarity of purpose and the opportunity to build a solid financial foundation.
I will take the time to listen, explain things clearly and keep you informed throughout the advice process.

My experience is complemented by professional qualifications including:

  • Certified Financial PlannerTM Professional
  • Diploma of Financial Planning

At Choice Financial Advice we work with you along the way on life’s journey.

Whether you are getting married, starting a family, embarking on the trip of a lifetime, planning to enjoy your years after work or assisting elderly parents with Aged Care and Nursing Home placements, we can help.