YOUNG Singaporeans are eager to invest, but a third of them are also anxious about making the right investment decisions. Having a limited budget, fear of incurring losses and a lack of investment knowledge are among the top challenges this generation is confronted with when thinking about investments, a survey by global asset management firm Franklin Templeton showed.

The inaugural Next-Gen Investor Survey, which polled 500 Singaporeans aged between 18 and 35, found that half of the respondents agree that investing should start at a young age and that it is an important practice for financial planning.

However, about a third also agreed with statements such as "making the right investment is difficult" and "investment makes me anxious". One in 10 said that "investment is only for people who have a lot of money", while a 10th also felt that investments are not essential in their lives.

Drilling down into the investment challenges, slightly over a third, or 36 per cent, have a limited budget for investment while 32 per cent have made losses or fear making losses. Twenty-eight per cent of the respondents feel they lack investment knowledge or experience, while a quarter find investment too risky.

Twenty-one per cent of the respondents find investment returns unattractive.

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The survey also showed that young Singaporeans have high expectations when it comes to investment returns, Franklin Templeton said. More than half, or 52 per cent, expect over 10 per cent annual returns, while a third (33 per cent) expect 5-10 per cent, and 15 per cent expect 1-5 per cent in annual returns.

To be sure, the pool of respondents came from a wide range of income brackets, with 37 per cent earning below S$3,000 a month, 31 per cent earning within the S$3,000-5,999 bracket, 20 per cent earning within the S$6,000-9,999 bracket and 11 per cent above S$10,000.

The average annual investment among the respondents stands at slightly over S$18,000, and dollar-cost averaging through recurring investments (56 per cent) supersedes lump-sum investments as their preferred approach (24 per cent).

Fifty-seven per cent of the respondents adopt a "60 per cent equity and 40 per cent fixed income" asset allocation, with the rest adopting either other allocation strategies (23 per cent), or do not have a strategy (20 per cent).

For those who are time-starved and stressed about their finances, exchange-traded funds (ETFs) and fixed income (30 per cent) are the most popular type of investment, followed by cryptocurrencies and equities (28 per cent).

When it comes to satisfaction with current investments, cryptocurrency (81 per cent), comes out ahead, followed by ETFs (76 per cent), equities (72 per cent), fixed income (71 per cent) and mutual funds (70 per cent).

Dora Seow, Franklin Templeton's Singapore country head, said young investors looking to maximise their returns outside traditional asset classes amid a low-yielding environment should consider diversifying their portfolios to better ride out high volatility in these spaces.

"We would encourage young investors to remain invested over the long term and rebalance their portfolio on a regular basis in line with their risk tolerance and investment goals as they grow through different milestones in their life," she said.