Young Canadians strive for financial security during the COVID-19 pandemic
Paul Aje said he was fired from his job as a cash management analyst when the COVID-19 pandemic began.
“It was a blow to my face,” Aje said. “I never thought it could happen to me.”
The 25-year-old said he lived from paycheque to paycheque and wondered how long his savings would last until his next job.
“I thought to myself, if this could happen to me after giving my all to a company, then I need to protect myself and not rely on a job,” he said.
Aje, now a compliance officer at a financial institution, said the COVID-19 pandemic made him invest, spend less, and save more to secure his financial future.
A survey by Sun Life Financial published on March 11 by the financial services organization stated 80 per cent of Millennials, people born between 1980 and 1996, and 89 per cent of Gen Z, people born between 1997 and 2012, reported a need to secure their financial future because of the pandemic.
This online survey sampled 1,000 Canadians aged 18 and older between Jan. 21 to 25, with a margin of error of plus or minus 3.5 per cent.
The survey reported while 81 per cent of Gen Z and 76 per cent of Millennials reported the pandemic had made them want to focus on financial security, 74 per cent of Gen Z and 60 per cent of Millennials found the loss of employment had made saving for the future difficult.
Oricia Smith, president of SunLife Global Investments, said in a press release the uncertainty created by COVID-19 highlighted the importance of preparing for the unexpected.
“It’s encouraging to see younger generations take an interest in setting achievable goals, planning for the future, and investing even a small amount of money,” Smith said. “It will benefit them for years to come.”
Aje agreed and said his interest in investments and stocks increased since the pandemic began.
“I was excited. Imagine $1 in your account turns to $5 and $10 becomes $20. That change was very satisfying,” he said.
Aje said he invests in stocks that fit his interests, comfort level, and risk appetite.
“I have always looked at the money in my account and wondered how it could make more money,” he said.
Aje said he familiarized himself with the necessary terms in investment through books and TikTok.
Carleton University student Olumide Akinola said he got his knowledge from YouTube.
“I have a lot of YouTube subscriptions that I watch constantly, learning what’s going on in the stock market and when to buy,” he said.
The 27-year-old computer engineering master’s student, who works part-time, said his savings increased during the pandemic because he saw an opportunity to make money in the stock market.
“When the pandemic started, there was a plunge in the price of stocks but I saw this as an opportunity to buy more,” Akinola said.
He said before the pandemic, he had 10 per cent of his savings in the stock market, 20 per cent in direct savings, and 20 per cent in mutual funds.
“Currently, 50 per cent of my monthly income goes to my savings,” he said. “I make sure 20 per cent goes into stock markets, 20 per cent goes into mutual funds, and 10 per cent stays in my direct savings.”
However, Akinola said there is a risk factor regardless of how profitable the stock market is.
“I am currently losing a lot of money,” he said. “In the past months, I have lost over $4,000. I am not bothered because it is a long-term investment.”
Laleh Samarbakhsh, associate professor of finance at Ted Rogers School of Management, Ryerson University, agreed and said the goal of investments, especially among young people, is to have a secure retirement plan.
“The younger you are, the more risk you can take because you have a longer life ahead,” she said. “In the years that you are fruitful in terms of economic income, you should save and protect that saving.”
Samarbakhsh said the goal of investments is having capital increase in value.
“Any transformation of your capital is a financial investment, such as equity markets, fixed income markets or government bonds, real estate, and home renovations,” she said.
Samarbakhsh said although social media and technology are changing how people invest, young people need to get advice from certified professionals.
“Particular mobile apps and trading tools make it easier, faster, and less costly to trade,” she said. “But get sound investment advice from certified professionals.”
Samarbakhsh said there will be a stable flow of information post-pandemic because of more physical interactions but technological advances will remain.
She said the pandemic has provided new ways for all generations, Millennials and Gen Z to look back and find new ways of making money.
Akinola agreed and said young people need to learn to save and invest more.
“It’s good to save no matter how much you earn,” he said. “There are a lot of resources around. It is something everyone should learn.”