Managing your investments: it's all about your age

Forget sector analysis, diversifying your portfolio, and even your own personal risk profile – how you invest comes down to the generation you grew up in

A member of the ‘silent generation’, the world's most famous investor Warren Buffett could be feeling pretty positive about his finances (Reuters)

Where you put your hard-earned cash, how optimistic you feel about your investments, even how often you check your accounts are all heavily influenced by your age and experience.

That’s the conclusion of a major new study into how we manage our money, which has found a surprising gap in investor behaviour based on the generation we belong to.

Research by financial services company Hargreaves Lansdown has found that baby boomers – people aged 51 to 70 – and the so-called “silent generation”, those older than 71, feel particularly lucky with their cash. They have £4 in every £5 of their invested money in the stock market, and tend to trust a fund manager to make the most of their money.

Baby boomers feel the biggest risk to their finances is low interest rates, while millennials – aged 18 to 35 – believe Brexit will cause the most financial damage in 2017.

The younger you are as an investor, the more aggrieved you probably feel in general, with the nation’s youngest adults, along with generation X – aged 36 to 50 – feeling particularly hard done by when it comes to financial luck.

But this isn’t just about whether you have been around to take advantage of economic cycles, or how you vote.

“The disparity between how different generations view low interest rates shows how loose monetary policy has hit the over-50s harder than their younger counterparts, as savers tend to accumulate more cash in the bank and reduce borrowing as they grow older,” says Laith Khalaf, a senior analyst at Hargreaves Lansdown.

At the other end of the scale, the situation has particularly benefited generation X, those with high mortgage debt but minimal cash savings who found it easier to get a foothold on the property ladder – which millenials are struggling with.

“The economic effect of Brexit is also a bone of contention among the different generations,” says Khalaf.

“There is concern across the board about the effects over the short term, but baby boomers and the silent generation are much more upbeat about the long-term results we can expect from Brexit.” In fact, the older you are the more optimistic you are likely to be about the economy in general.

Elsewhere, different generations showed significant differences in terms of protfolio management. The under-35s check their portfolios most often; baby boomers are most likely to dabble in shares; and the silent generation tends to invest in UK equities, especially the FTSE 100 – while millennials and generation X investors are more likely to look overseas for their returns

And when it comes to being taxed on those returns, almost twice as many millennials as over-70s think UK taxes are too high. The former fear stamp duty while, unsurprisingly, the silent generation is particularly intimidated by the shadows of inheritance tax.

“The variation between the generations in terms of their investment habits stems from both their different experiences, and also the fact that financial goals change as investors move through the various stages of their lives,” says Khalaf.