Surge in young investors due to coronavirus market

Younger generations are embracing the risks of investing following the initial coronavirus market crash, new research from the personal finance comparison site, finder.com, has found.

Over a quarter of gen Z and millennials (28% and 26%) say the market crash has made them more likely to invest over the next 12 months. This is almost 3 times higher than the silent generation (10%) and significantly higher than baby boomers (16%).

They are also the generations most interested in investing more broadly. Three quarters of both gen Z’ers and millennials plan to invest at some point (75% and 74%), while only 4 in 10 (41%) of the silent generation will do so.

One of the reasons behind this is their adoption of dedicated investing apps. Over 4 in 10 millennial investors (44%) said the accessibility of trading apps was a reason behind their interest, and a third (32%) appreciated the low cost of investing this way.

In contrast, baby boomers were much less likely to cite both the accessibility of trading apps (18%) and the low fees they offer (13%).

Young investors are also twice as likely to invest in firms that are struggling, due to the cheaper share price. A third of gen Z’ers (34%) plan to do this compared to 17% of gen X’ers and 16% of baby boomers.

Across all ages, investor sentiment appears to be split on whether the Coronavirus, and subsequent market crash, offers a good opportunity to invest or not. While 1 in 5 (20%) potential investors say it has made them more likely to invest over the next 12 months, the same amount (20%) say they are less likely to invest as a result.

What are the UK’s investing plans?

The UK is experiencing a surge in share-trading interest, with two thirds of the population (67%) planning to buy stocks and shares in the future. This is a 32% increase since 2018.

The most popular reason for people looking to invest is the poor interest rates that savings accounts currently offer. Over half (55%) of those interested in share trading have been motivated by this, and it was also the top reason in 2018.

Positively, over a quarter (27%) of potential investors want to do so ethically, and back firms that have a beneficial impact on society.

While more men are planning to invest than women (73% v 61%), the percentage of women looking to invest has grown by 41% over the past 2 years.

The full paper, Investing in a coronavirus world: A brave new dawn?, includes expert comment from industry leaders along and can be viewed and linked to here.

Commenting on the findings, Charlie Barton, banking and investment specialist at personal finance comparison site, finder.com said: “Young people are turning to investing because the traditional places to put their money aren’t serving them well enough. Interest rates in savings accounts are low, so it is logical that people will look elsewhere to grow their longer-term wealth.

“Younger generations also seem to have a bigger appetite for risk, primarily because they have an asset no one else has – time. They have their whole lives to ride out market turbulence, so are more inclined to view the current market lows as an opportunity, despite the real possibility of their investments losing value.

“Investing apps fit perfectly into this climate. By welcoming young investors with slick UX and low charges, I’d expect the trend of young people investing to continue upwards. Those that also educate new investors will be building loyalty for the long term”