Millennials and Gen Z differ greatly in many aspects to previous generations, particularly in their attitudes towards work, technology, money and social issues. These two generations have been born and raised in a time of increasing technological advancements, increasing social media presence, climate change awareness and generally lower economic prosperity.
Members of these generations, including myself, are increasingly looking towards investment as a means of growing wealth and an alternative to ultra-low interest rates for traditional savings accounts. According to the latest data from our Financial Research Survey (FRS), over the last three years the proportion of 18-34-year-olds holding investments has nearly doubled to 15%. In contrast, those with savings has fallen over the same period.
With this increasing number of young investors, the question arises as to how they differ from the previous generations, and whether this new wave of investors are taking fewer or more risks with their money than their older counterparts, and what servicing needs will they need? Will they also differ to what has been offered before?
Younger investors are keen adaptors of digital means of investment, specifically the new market of cryptocurrency. Cryptocurrency is the epitome of a millennial trend of digitalising anything and everything, making currency itself a digital entity. Almost 60% of cryptocurrency investors are young investors, according to the FRS. This younger demographic are also active investors in other alternative investment products such as Peer-to-Peer lending and Retail bonds than older age groups.
Although there is evidence that younger generations are more willing to take risks by investing in alternative and innovative products, the more stable and traditional methods remain popular. Equity ISA’s and the relatively new Lifetime ISA remain, with almost three-quarters of young investors holding one of these versus less than 5% holding cryptocurrency.
The lifetime ISA has demonstrated that a good way to get this generation into investing is through offering a stable product with an incentive to save. Personally, as a 22-year-old student, my investment portfolio is very much based on “slow and steady wins the race” instead of high risk, get-rich-quick products.
‘Mind the Gender Gap’ - Women and Money
Britain’s Financial Services sector is one of the strongest and most sophisticated in the world, but with this heritage comes a legacy sometimes at odds with consumer needs. This short film explores these issues through expert interviews and stories from across the country.