TIPSLIFEHACKS

The Australian dream of homeownership is increasingly out of reach for young people, forcing many to explore alternative investment strategies. According to leading economist Tom Piotrowski, a growing number of micro-investors are diverting their spare cash – often around $24,000 – into the share market as a viable alternative to the increasingly unaffordable property market.

The Housing Crisis: A Generation Locked Out

For years, rising property prices in major Australian cities like Sydney and Melbourne have presented a significant barrier to entry for first-time homebuyers. Wage growth hasn't kept pace with these increases, making it incredibly difficult for young Australians to save a sufficient deposit, let alone secure a mortgage. Interest rate hikes in recent times have only exacerbated the problem, further squeezing household budgets and pushing homeownership even further out of reach.

“We’re seeing a generation priced out of the housing market,” explains Piotrowski. “The traditional pathway to wealth – buying a home – is simply not accessible for many young Australians. They are actively searching for alternative ways to build their financial future, and shares are proving to be an attractive option.”

The Rise of Micro-Investing

Micro-investing platforms have made it easier than ever for individuals with limited capital to participate in the share market. These platforms often offer low brokerage fees and allow users to invest in fractional shares, meaning you don't need to buy an entire share – you can buy a portion of one. This accessibility is particularly appealing to young people who may not have tens of thousands of dollars to invest upfront.

$24,000: A Strategic Starting Point

Piotrowski highlights $24,000 as a common investment amount he's observing. “It’s enough to build a diversified portfolio, spread across different sectors and asset classes, which helps to mitigate risk. It's also a manageable amount for young people, allowing them to start small and gradually increase their investments as their financial situation improves.”

Beyond Property: The Benefits of Share Investment

• Potential for Higher Returns: Historically, the share market has offered higher returns than traditional savings accounts or fixed deposits.
• Diversification: Investing in shares allows you to diversify your portfolio across different companies and industries, reducing risk.
• Liquidity: Shares are generally easy to buy and sell, providing greater liquidity than property.
• Accessibility: Micro-investing platforms have made share investing more accessible than ever before.

Important Considerations

While share investing offers significant potential, it's crucial to acknowledge the risks. The share market can be volatile, and there's always the possibility of losing money. It's important to do your research, understand your risk tolerance, and seek professional financial advice before making any investment decisions. Diversification is key to managing risk effectively.

Looking Ahead

As the housing market remains challenging, it’s likely that more young Australians will continue to explore alternative investment options like shares. The rise of micro-investing platforms is empowering a new generation of investors, giving them the tools and accessibility they need to build their financial future, even if the dream of homeownership seems distant for now. The shift signifies a broader change in how young Australians are approaching wealth creation, adapting to a new economic reality where traditional pathways are increasingly blocked.