Investment expert sheds light on investors' behaviours
According to Emma Wall of Hargreaves Lansdown, investment decisions are usually dictated by the life stage of the investors Towfiqu barbhuiya/unsplash.com

Emma Wall, the Head of Investment Analysis and Research at Hargreaves Lansdown, recently shed light on how different generations approach investing. In her analysis, Wall noted that there are noticeable contrasts in the investment portfolios of young and old investors. She explained that this divergence is largely due to investors adjusting their investments to align with their current stage in life.

According to Wall, "they have more that unites them than divides them". Although different generations may approach investing differently, they ultimately share a common goal: to maximize their returns while minimizing risks.

The investment analysis and research expert noted that both investors seek optimistic growth stories. According to her, both the young and old investors hold banks and oil majors - "reflecting their history of producing strong dividends, and the profits oil companies have been making while the oil price is higher".

Wall added that the different generations see opportunities in various places.

"Younger people are more likely to have technology companies in the mix, taking advantage of the way tech is transforming economies around the world," the investment analysis and research expert said.

She also mentioned how parents favour "these stocks for their JISA portfolios". The older investors, on the other hand, are more likely to hold pharmaceuticals "as the population ages".

Similar reports revealed that investing in tech will help keep the London market competitive.

In terms of how both age groups of investors approach trading, Wall stressed that it differs. She mentioned those aged 65 and above trade the least, then investors aged 18-29, and those aged 30-54 followed. Wall disclosed that those aged 55-64 trade better than their nearest rival. According to her, they invest more because retirement is close, and they need to place their portfolio differently for income and capital protection instead of growth.

On selecting funds, Wall stated that some themes interest across the generations.

She said, "All have exposure to global funds and those that spread the net far and wide. Younger investors favour tracker funds, which offer exposure to long-term growth at a low cost."

The investment analysis and research expert further added, "They also have some smaller company funds in the mix, which reflects that those with a longer time horizon tend to be able to take a little more risk".

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Wall stressed that while young and old investors are likely to have some exposure to the US, the younger age group tends to have more. She stated that it's partly because the market is influenced by some of the growth stocks and technology they favour.

When parents select funds for a Junior ISA, according to Wall, they are aware that they can afford some more adventurous funds within a time frame of 18 years.

She added, "So among trackers and global funds they have smaller companies and emerging markets.

"As we get older, we are marginally more likely to pick a sustainable fund, which makes it to the top ten for those in mid-life. And as your investment needs change, income funds play a more important role."

The Hargreaves Lansdown's data reveals the top share of the different age groups, with the investors aged 18-54 having shares in Amazon.com, Apple, BP, International Consolidated Airlines Group, Legal & General Group, Lloyds Banking Group, Microsoft Corporation, Rolls Royce Holdings, Shell and Tesla. The investors over 55 years have shares in AstraZeneca, Aviva, BP, GSK, Legal & General Group, Lloyds Banking Group, National Grid, Rio Tinto, Shell, and Unilever.