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Speaker 1: Welcome to the Fear and Greed business Interview. I'm sure

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Speaker 1: and Alma. One of the golden rules of smart investing

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Speaker 1: is diversification. But almost half of all Australian investors are

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Speaker 1: unlikely or unsure whether to diversify their portfolios. It's an

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Speaker 1: alarming statistic considering all the evidence that shows the importance

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Speaker 1: of not putting all your eggs in one basket. Every year,

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Speaker 1: HSBC Australia survey's local investors for their Investor Insights Survey,

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Speaker 1: revealing exactly what they're doing with their money. Remember this

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Speaker 1: is general information only and you should always seek professional

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Speaker 1: advice before making investment decisions. David Talbot is Senior Manager

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Speaker 1: Investments at HSBC Australia. David, welcome to Fear and Greed.

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Speaker 2: Thanks for having Michel.

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Speaker 1: Why are investors shunning diversification. I would have thought that's

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Speaker 1: kind of the first rule of investing.

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Speaker 2: Yeah, it's interesting. When we've done the survey. We asked

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Speaker 2: investors whether they would consider diversifying their portfolio further in

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Speaker 2: the next six months, and what we're seen over the

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Speaker 2: years of doing the survey's a bit of a downward trend.

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Speaker 2: Initially in twenty twenty two, we asked respondents that question,

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Speaker 2: sixty percent said that they would. Now last year was

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Speaker 2: that to fifty eight and now this year it's just

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Speaker 2: fifty one percent. So we're seeing a downward trend certainly

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Speaker 2: in terms of whether the Australian investors looking to diversify further. Now,

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Speaker 2: the interesting thing about our survey is that we started

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Speaker 2: it back in twenty twenty two when Australians were just

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Speaker 2: coming to terms with high interest rates, higher inflation, and

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Speaker 2: the cost of living crisis really hadn't hit its full steam,

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Speaker 2: so to speak, and so what we get to see

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Speaker 2: over the last couple of years is how those factors

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Speaker 2: in the broader economy have affected the Australian investor. And

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Speaker 2: what we can see also in the statistics is that

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Speaker 2: Australians are less engaged with their investments. Last year, four

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Speaker 2: percent of Australians said that they don't check their investments

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Speaker 2: at all. Now that's up to ten percent this year.

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Speaker 2: So you're having an investor base that's much less engaged

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Speaker 2: with their I think that flows through SEAWAN to the

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Speaker 2: diversification piece. If you're less engaged, less likely to consider

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Speaker 2: other options and less likely to diversify your portfolio further.

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Speaker 1: So when we're talking about diversification in this case, what

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Speaker 1: are we talking about. Is this away from the focus

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Speaker 1: on Australian chairs primarily or is it much more than that.

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Speaker 2: Predominantly we have seen Australians focus on on shore assets.

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Speaker 2: Seventy five percent of what Australian is investing is in

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Speaker 2: on shore, so there's definitely opportunities for Australians to look overseas. Now,

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Speaker 2: where you do break that down a little bit further,

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Speaker 2: it does seem to be more of a generational split.

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Speaker 2: So the older generation, the Baby Boomers eighty seven percent

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Speaker 2: of what they invest in is in on short assets.

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Speaker 2: The youngest generation that we survey, Gen Z sixty three

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Speaker 2: percent of what they do is on shore. So pretty

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Speaker 2: big difference there in terms of what the older generation

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Speaker 2: is doing versus the younger generation. So I guess the

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Speaker 2: more of a tendency there for them to look off shore,

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Speaker 2: and I think looking off shaw is definitely an opportunity

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Speaker 2: for or investors to think about investing and diversifying further.

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Speaker 2: What we see as well when people are diversifying is

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Speaker 2: you can diversify across sectors as well we are quite

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Speaker 2: spoiled in Australia when it comes to our market. You know,

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Speaker 2: we've got a great real estate market for investors, and

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Speaker 2: when you look at the stock market as well, dominated

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Speaker 2: by financials and by mining companies, they pay great dividends.

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Speaker 2: You know, they've got stable earnings as well, and so

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Speaker 2: with someone locally looking to invest, it's a pretty easy

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Speaker 2: decision to kind of invest in one of those one

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Speaker 2: of those assets, and so we see that in the

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Speaker 2: statistics as well. Thirty six percent of what Australian is

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Speaker 2: investing on shore is in financials, which is the largest

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Speaker 2: sectorc that they invest in on shor. So it's I

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Speaker 2: think Shawn's twofold. It's opportunity to look offshore. Certainly there's

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Speaker 2: opportunities there, but as well on sector basis, I think

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Speaker 2: there is a chance to broaden that exposure as well.

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Speaker 1: The survey says that older investors and I'd hate to

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Speaker 1: put myself into this category, but it actually spoke to

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Speaker 1: me totally. I'm more likely to invest in financials and

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Speaker 1: potentially resources, Younger investors more likely to think about tech stocks,

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Speaker 1: and that is that I suppose it's natural because a

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Speaker 1: younger person who has grown up the social media understands

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Speaker 1: technology probably better than they I understand coming off bank.

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Speaker 1: I get that, But is it a good or a

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Speaker 1: bad thing that there's a diversity in ages in terms

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Speaker 1: of the sectors that are going into.

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Speaker 2: I think it represents an opportunity for each generation to

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Speaker 2: just broaden their exposure further.

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Speaker 1: As well.

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Speaker 2: Some more strateistics that we saw that come through in

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Speaker 2: the survey. The younger generation was investing actually a lot

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Speaker 2: in crypto and NFT, so thirty nine percent of gen Z,

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Speaker 2: thirty six percent of millennials in that asset class, and

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Speaker 2: that was a main asset class that actually invested in

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Speaker 2: the last six months. On the other end, you had

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Speaker 2: gen X and gen Z investing predominantly in fixed income

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Speaker 2: and term deposits. So quite a difference there, I think

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Speaker 2: in terms of the risk appetite from different generations. Potentially,

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Speaker 2: what its is a reflection of Sean is that the

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Speaker 2: younger generations have seen the older generations build a lot

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Speaker 2: of their well from real estate in the last sort

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Speaker 2: of ten to twenty years. And you know what average

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Speaker 2: property prices in a place like Sydney's, you know, one

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Speaker 2: and a half million dollars it's hard for a young

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Speaker 2: person to figure out a way to get into that market,

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Speaker 2: and so maybe they're taking a little bit more risk

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Speaker 2: and explating their exposure a little bit more to things

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Speaker 2: like technology like you mentioned, Sean. Then the older generation

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Speaker 2: might sticking with things that are a bit more comfortable.

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Speaker 2: So it's potentially a reflection of the younger generation trying

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Speaker 2: to bridge that generational wealth divide that seems to be

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Speaker 2: a play in Australia.

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Speaker 1: Stay with me, David, we'll be back in a minute.

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Speaker 1: My guest today is David Talbot from HSBC Australia. What

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Speaker 1: about investing in ETFs or bonds? So perhaps less sexy products,

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Speaker 1: want a bit of a term, you know, you're not

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Speaker 1: jumping on a Wis Turke, jumping on in video or whatever.

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Speaker 1: You are investing in debt markets and ETFs. Where's that going.

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Speaker 2: We've actually see a bit of a trend downwards for

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Speaker 2: Australian investors in the last couple of years in terms

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Speaker 2: of whether they would look at that particular investments. We

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Speaker 2: asked our respondents, you know, whether they would consider investing

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Speaker 2: in an ETA for a managed fund or a bond

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Speaker 2: in the next six months. Originally fifty five percent of

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Speaker 2: respondents said that they would fifty three last year, and

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Speaker 2: now it's down to forty seven. Now. Look, I think

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Speaker 2: it's it's an interesting move that people seem to maybe

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Speaker 2: be taking a little bit more let's say, ownership or

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Speaker 2: of their investment strategy in investing in things that they

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Speaker 2: perhaps take a specific interest in. That being said, though,

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Speaker 2: I think we could come back to the golden rule

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Speaker 2: of diversification. I think ETFs and managed funds, although not

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Speaker 2: being as sexy as you mentioned as perhaps some of

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Speaker 2: the single stock investments you can look at are a

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Speaker 2: great way to follow that kind of golden rule of

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Speaker 2: diversification and get a broad exposure to markets that maybe

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Speaker 2: investors might not be familiar with as well, if you're

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Speaker 2: looking to kind of dip your toe in overseas so

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Speaker 2: to speak, as well, if you're predominantly looking on shore,

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Speaker 2: you've been investing on shore for a while, you know

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Speaker 2: something a single stock overseas, perhaps in the technology sector

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Speaker 2: in the US, might seem a bit intimidating. But if

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Speaker 2: you look for an ETF or a managed fund that

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Speaker 2: gave you broad diversified exposure, it allows you to enter

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Speaker 2: into the market at the lower level of risk, but

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Speaker 2: then also diversify your portfolio further as well.

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Speaker 1: What about the idea of timing and time in the market,

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Speaker 1: so another you know, i'd put this longside diversification in

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Speaker 1: terms of if you're a long term investor, you've got

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Speaker 1: to be in the market for a long term as

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Speaker 1: opposed to trying to get in and out in time

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Speaker 1: the ups and downs. Does the survey say anything about that.

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Speaker 2: Yeah, it's we have seen that Australian investors are investing

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Speaker 2: less frequently, so we ask respondents whether they invest regularly.

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Speaker 2: Last year twenty percent of respondents said that they invested

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Speaker 2: on a regular basis, and how that numbers actually increased

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Speaker 2: to twenty six percent of investors. So I think it

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Speaker 2: does speak to the you know, Australian investors being perhaps

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Speaker 2: a little bit more fatigued if you will, or you know,

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Speaker 2: shifting their priorities. And again we spoke about the impact

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Speaker 2: of cost of living crisis and higher inflation that's been

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Speaker 2: playing out, and perhaps that's a hard of the reason

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Speaker 2: why Australians aren't investing as regularly. But I do agree

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Speaker 2: to and I think that investing regularly is another golden

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Speaker 2: rule because if you're trying to time the market, I

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Speaker 2: think two risks really come to life. One, it's very

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Speaker 2: very difficult, you know, particularly if you're a retail investor

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Speaker 2: so to speak, you're up against some big players in

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Speaker 2: the market, and it's you know what you're up against,

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Speaker 2: the technologies that they have. It's very difficult to make

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Speaker 2: you a quick buck, so to speak. Is also very

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Speaker 2: risky in the sense that you could lose some money

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Speaker 2: there as well. And also trying to time the market.

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Speaker 2: You can make the excuse that you put off investing

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Speaker 2: for a long period of time to the perfect moment arises,

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Speaker 2: and that might never come. So I think you miss out,

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Speaker 2: like you said, on the opportunity to build long term wealth.

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Speaker 2: I mean, there's a real and why the super funds,

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Speaker 2: you know, you put money away towards your super fund

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Speaker 2: every single month or whenever you get your paycheck, because

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Speaker 2: you build that wealth over a longer period of time.

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Speaker 2: And so I think, if you know, despite Australian investors

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Speaker 2: investing less regularly right now, I think hopefully we can

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Speaker 2: return to a place where people do invest on a

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Speaker 2: more regular basis in order to follow that golden rule

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Speaker 2: of investing. Regularly to build that long term wealth.

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Speaker 1: Well, one thing I did note in the survey is

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Speaker 1: the amount of money people think they need to have

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Speaker 1: to invest, and I actually thought it was quite high

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Speaker 1: because you can invest small amounts and build it over time. Now,

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Speaker 1: I think the numbers, certainly for males over females, was

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Speaker 1: relatively high.

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Speaker 2: Yeah, it was interesting to see the difference between males

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Speaker 2: versus females in terms of what they thought was needed

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Speaker 2: to get started in investing. Males thought you needed about

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Speaker 2: sixteen eight hundred dollars worth, of females almost half at

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Speaker 2: eighty eight hundred dollars, So quite a difference there. But

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Speaker 2: agree short, I think it was interesting that the number

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Speaker 2: was so high. Even broadly speaking, investors this year still

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Speaker 2: thought you need a thirteen thousand, two hundred dollars or

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Speaker 2: so to get started in investing, And to your point,

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Speaker 2: you can get started for much much less, you know it,

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Speaker 2: Maybe it's a reflection from the Australian investor that they

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Speaker 2: maybe they're still priced out of certain things, you know,

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Speaker 2: they maybe they full price out the popular market, maybe

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Speaker 2: they fell priced out of investing, and I guess that's

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Speaker 2: just not the case. To your point, they can get

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Speaker 2: started for very little. You know, the soon as you

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Speaker 2: get started, the quickly you'll be able to build that

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Speaker 2: long term wells Ryan, the sooner that compaut interest, that

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Speaker 2: compating effect will take place, and so you know, I

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Speaker 2: think there is an opportunity to sort of bring that

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Speaker 2: number down, hopefully and get more people investing at at

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Speaker 2: a lower.

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Speaker 1: Minimum, hopefully. David, thank you for talking to Fear and Greed.

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Speaker 2: Fantastic Sean, thanks so much for having me.

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Speaker 1: There's David Talbot, Senior Manager Investments at HSBC Australia. This

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Speaker 1: is the Fear and Greed Business Interview. Remember this is

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Speaker 1: general information only and you should always seek professional advice

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Speaker 1: before making investment decisions. Join us every morning for the

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Speaker 1: full episode our Fear and Greed daily business news for

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Speaker 1: people who make their own decisions. I'm Sean al marke

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Speaker 1: Enjoy your day, do