How Children Today Are Teaching Their Parents About Investing
Not too long ago, in the 1950s, the process of investing was both expensive and time-consuming. People who could afford to invest in stocks only did so via stock brokerages, which virtually monopolised the market. Fixed commissions were the norm — and these were usually quite high and typically non-negotiable.
Moreover, investment choices were quite limited and overseas investing was unheard of. Stock trading was complicated, and the concept of real-time stock price updates was unimaginable. Thus, investors had to get in touch with a stockbroker to get current price quotations.
Although a lot has changed since then, some people still miss out on what could be great opportunities to grow their wealth and build a more secure future for their family and retirement. Most people still depend on saving the traditional way in the bank. Others invest in real estate or equities.
However, there’s also a new trend in investing. Today, it seems the older generations — including Baby Boomer parents — are learning about new investment options from their children.
Here, I’ll talk about the very different investment landscape of today and how a new generation of investors are teaching their parents about fractional investing.
Investing in the New Millennium
Compared to a couple of decades ago, investing in the 2000s is so much easier, especially now.
Today, the range of investment choices is so vast, new investors find it to be both confusing and intimidating. However, learning about stocks, bonds, equities, cryptocurrencies, exchange-traded funds (ETFs), startup investing, fractional investments and other modern-day finance lingo is so much easier. There are financial and investment advisors, publications, and resources on the internet where interested individuals can learn the basics.
But what’s amazing about today’s investors is that they comprise a mix of Gen Xers, millennials and even older members of Gen Z. And it is these generations of investors that are helping to teach and encourage their elderly — sometimes retired — parents to make a foray into the world of investments.
The technological innovations over the past two decades — including the proliferation of computers and mobile devices, and the widespread use of the internet — led to the development of a new investment paradigm.
Thanks to these developments, people now have unprecedented access to online trading platforms that charge relatively lower commissions. Rapid trading is easily facilitated as well, and investors have access to both local and overseas markets.
Moreover, the tech-savvy and tech native young investors of today have the tools and resources they need to learn about investing strategies. They can easily educate themselves on the returns and risks that come with various asset classes.
And since the availability of fractional investing, this new breed of investors is keen on taking advantage of this new opportunity to grow their wealth, and let their parents in on it as well.
Even people in their 50s, 60s and 70s today can start investing as late as now, especially since some elderly adults continue working part-time after retirement. Others delay their retirement or remain active and continue working long after they reach retirement age.
Fractional Investing — An Affordable Way to Grow Wealth
If it’s your first time hearing about fractional investing, it’s actually not a new investment strategy. However, it has been gaining traction in recent years as more young people recognise the benefits it offers.
In simple terms, fractional investing allows you to buy ‘stock slices’ that fit into your budget. This means you can trade using dollar amounts or fractional, dollar-based increments instead of individual shares. Thus, if you can’t afford to buy shares of Google, Meta or any Australian blue-chip stocks, you could choose to buy a fraction of a share through fractional investing. In fact, anyone with a few hundred dollars to spare, young or old, can benefit from it.
It’s no wonder, then, that parents are taking a cue from their children and venturing into fractional investing.
Aside from stocks, fractional investing is also a popular option in property investments, so it’s a wealth-building strategy worth exploring.
If you need help getting started on your investment journey or require financial advice, please get in touch with your Financial Adviser.