The great advantage the young - and here we are referring to 18-25 year olds - have over those of us closer to retirement is time.

Time is a powerful investment tool because it gives you the ability to take a long-term view and ride through the inevitable market ups and downs.

Serious market downturns like the 2008 global financial crisis look completely different if viewed through the eyes of a 25-year old versus a 65-year old.

Investment experience suggests the GFC was a buying opportunity for the young and - depending on their asset allocation - a distressing lifestyle changing event for the recently retired.

Which makes the results of the 2017 ASX Australian Investor Study noteworthy. The survey of 4000 investors by Deloitte found that younger Australian investors were highly conservative in their attitude to investment risk.

The ASX survey found that around 31 percent of younger people wanted guaranteed returns and only 19 per cent would accept variability in returns. In contrast only 8 per cent of those surveyed aged over 75 look for guaranteed returns and 35 percent would accept variability in returns.

Interestingly, Australians are more conservative than investors in other countries according a global study of investor risk tolerance done by fund manager Legg Mason in 2015 that found only 29 percent of Australian investors would be prepared to increase their risk profile for the opportunity to gain extra income. Globally 66 percent of investors said they would be prepared to increase risk for the chance of higher yield.

Investing is essentially about getting the risk and return balance right and a key determinant is an investor's age.

For younger investors their relative youth is an asset that it seems many - paradoxically perhaps given risk-taking behavior more typical of 18-25 year olds - are undervaluing. Although a younger investor might feel more comfortable investing more conservatively, what they may not be considering is the opportunities for growth they are passing up in favour of short-term stability.

Another interesting stat from the survey was that only 37 per cent of young investors used financial advice to help them make investment decisions, compared to 45 per cent for all investors.

Although many investors perceived that going to an adviser was too expensive or perhaps weren't sure of their value proposition, a good financial adviser who can help an investor determine an appropriate level of risk based on their goals and time horizon, and then help them maintain the discipline and focus to stick to their plan through market ups and downs, could be one of the most valuable investments of all.

Written by Robin Bowerman
Head of Market Strategy and Communications at Vanguard.
05 September 2017
vanguardinvestments.com.au