Older generations are investing less, data shows, as it is revealed younger people are increasingly behind investing trends.
As few as 23 per cent of over 55s have invested money over the past 12 months, according to exclusive figures from wealth management platform Stratiphy.
This compares with almost half of 18 to 34-year-olds, some 47 per cent, who have made investments in the past year.
The firm said this drive among younger investors comes as they look to beat inflation and low returns available on cash-based savings accounts.
While some 56 per cent of younger investors said they are more comfortable saving in cash due to the potential for volatility when investing, compared with 68 per cent of those over 55, as few as 29 per cent of 18 to 34-year-olds said they don’t intend to invest in the coming year.
In comparison, 66 per cent of over-55s said they won’t invest in the coming 12 months.
Unlike older investors, those buying in young can often afford to take more risk due to the longer time horizons available to them
The rising popularity of investing among younger people comes as a majority, 55 per cent, said they view cash savings as being as risky as investing, as they know the returns won’t keep pace with inflation.
Just 33 per cent of older investors said the same.
Daniel Gold, chief executive of Stratiphy, said: ‘Millions of young people are shunning poor value cash savings in favour of investing in order to beat inflation and secure higher returns.
‘Whilst their parents may be more risk averse as they approach retirement and favour cash savings over potentially superior yields from investments, Gen Z and millennials have time on their side to ride out market fluctuations and a strong appetite to maximise their future returns.’
| Year | Duration | Cash return | Investment return |
|---|---|---|---|
| 1998 | 0 years | £10,000 | £10,000 |
| 1999 | 1 year | £10,520.25 | £13,050.83 |
| 2003 | 5 years | £12,578.36 | £9,535.00 |
| 2008 | 10 years | £15,885.52 | £12,359.85 |
| 2013 | 15 years | £16,280.16 | £22,154.50 |
| 2018 | 20 years | £16,617.04 | £36,535.09 |
| 2023 | 25 years | £17,793.30 | £64,956.49 |
| 2024 | 26 years | £18,695.34 | £77,826.24 |
| Source: Vanguard (UK Sterling Overnight Interbank Average vs FTSE All-World total return, figures not adjusted for inflation) | |||
Unlike older investors, those buying in young can often afford to take more risk due to the longer time horizons available to them.
At odds with this, though, is that younger people tend to have much less capital that they can afford to invest.
Long term investing is likely to beat returns on cash, meaning that savers could be missing out on much higher returns by sticking to cash.
Figures from Vanguard show the difference could reach well into the tens of thousands over the course of a long-term investment.
£10,000 invested in the FTSE All-World index in 1998 would have returned £77,826.24, compared to just £18,695.34 based on the UK Sterling Overnight Interbank Average rate.
However, many of these younger investors said they were worried that they don’t have sufficient financial knowledge to do so effectively.
Almost 60 per cent of younger investors said this was preventing them to make fully informed decisions.
Gold said: ‘Faced with a growing cost of living crisis and a widening advice gap, it is vital that younger investors have access to simple wealth management tools that offer the personalisation and insights needed to empower them to take control over their portfolios and future wealth.’
#Young #people #drive #investing #boom #view #cash #savings #risky #inflation
