The TD Investor Insights Index, which examined the outlook of Canadian investors and external factors influencing their investment decisions, found the top reason Gen Y investors report making their first investment was family encouragement (41%). Baby Boomers, on the other hand, were more likely to report an increase in income as a trigger for their first investment (36%). Even with family encouragement to start investing, more than one third of Gen Y investors said knowing where to get trustworthy advice is a challenge (35%).

"Despite the perceived Gen Y plight, we're seeing young investors take action early on when it comes to planning for their financial future," said Cynthia Caskey, Vice President and Portfolio Manager, TD Wealth Private Investment Advice. "While family support can certainly help shape good financial habits, millennials face a very different financial reality than their parents did. An advisor can help cut through the confusion and develop a plan tailored to Gen Y's specific goals and unique challenges."

Starting good habits
In the past 12 months, the average proportion of income invested by Gen Y was approximately one fifth (18%). In an ideal world, they reported that they would invest closer to a third of their income (29%) and hope to be investing a similar amount (30%) in 10 years' time. Millennial investors were also more likely than Baby Boomers to say they would increase the proportion of their income invested if the stock markets improve (35% and 15% respectively).

"Young investors have the benefit of a longer time horizon and that means they can use their age to their advantage," added Caskey. "With time on their side, saving even small amounts regularly can add up, while allowing them to take advantage of compounding return. For example, by investing $100 each week, in 10 years an investor could put $65,551 towards a down payment on a home, assuming a 6% return rate. With the same regular contribution over 40 years, one could have $796,596 towards travel, starting a new hobby or even opening a business during retirement."
Thinking long-term

The TD Investor Insights Index also found that retirement planning and saving to buy a home were top of mind for Gen Y, despite today's competitive housing market. Even with balancing student debt loads and managing expenses, half of Gen Y investors said saving for retirement was their top investing goal (50%), followed by buying a home (44%), travel (43%) and achieving financial independence (42%).
"Today's young investors have many competing financial priorities, making it a challenge to balance short and long-term goals and navigate the investment options best suited to them," said Caskey. "TFSAs are a good choice for young people because of the flexibility they offer. There's a wide range of options for how to use the money - from storing it in a high-interest savings account to investing it in more volatile instruments such as mutual funds, equities or listed securities."

Taking control
While more than a quarter of Gen Y investors said that a parent or family member taught them about savings and investing (27%), almost one fifth of Gen Y investors said that they learned about savings and investments on their own (18%). Embracing the do-it-yourself attitude is synonymous with the millennial generation, nearly half (48%) of Gen Y investors manage their portfolios directly online.

"Today's young investors are savvy when it comes to building and managing their portfolios," said Alfred Chung, Director, TD Direct Investing. "With mobile technology, such as the TD mobile app, those who embrace the self-managed investing approach can retrieve real-time stock quotes, access markets and research, and place real-time trades from their smartphone."