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Crypto is the most well-known investment amongst young people.
You may have heard words like cryptocurrency and bitcoin floating around in the ether the last few years. But a combination of social media, lockdowns, and now the cost-of-living crisis means more than ever, people are aware of crypto.
This is especially the case for young people. New research by the Association of Investment Companies (AIC) has shown non-investors aged 20 to 40 are most aware of cryptocurrency as an investment option.
In fact, 70% of young people are aware of crypto such as bitcoin. Just 59% are aware of individual stocks and shares, followed by premium bonds (49%), bonds (43%), investment funds (23%), investment trusts (18%) and investments through crowdfunding platforms (18%).
Source: AIC/Research in Finance
When it comes to the factors preventing young people from investing, the research found the biggest barrier is a lack of understanding or knowledge (57%). Just over half (53%) cited the cost-of-living crisis as the second greatest hindrance to investing. This is followed by not having enough money to start investing (45%), being worried about markets or the economy (39%) and being worried it is too risky (30%).
People’s emotions also come into play when it comes to investing. Money is a very emotional thing, and people use their emotions to guide their money choices. So, it’s not at all surprising that young people describe their emotions around investing as cautious (54%), worried (41%), confused (39%) and stressed (25%).
There were two positive emotions identified, however – interested (43%) and excited (16%). Interestingly, just 12% of women said investing made them feel excited, compared to 32% of men.
Within the research, people were asked to describe their views on investing. Young investors’ concerns about risk were strong. This was especially the case in the context of a stalling economy.
One investor said: “It is like glorified gambling, you put money into shares without knowing if it will go up or down and you could even lose that money forever if it goes bust.”
Another commented: “Given the state of the world at the moment I am uncomfortable investing, it’s too risky, my dad has already lost a large total in his pension.”
A whopping 81% of young people are interested in finding out more about investing, either now or in the near future. Over a third (34%) of respondents said they had considered investing – but a lack of confidence stopped them.
Over half (58%) of respondents said an increase in salary would prompt them to start investing. Help from a financial advisor (46%) was the second most important catalyst. Surprisingly, winning the lottery came in third (43%).
The fourth most common thing that would prompt them to start is a recommendation from friends or family (41%), followed by more information on the benefits of long-term investing (38%). A third (33%) of respondents said inheriting money would persuade them to begin investing.
Unsurprisingly, most young people look online to find information on money, finances and investing. 40% of young people said they used Google or another online search platform to find out more. 19% said they used photo-sharing platform Instagram, followed closely by Youtube (18%). Websites in general are also used (13%), as is Facebook (13%), Twitter (8%), TikTok (8%), LinkedIn (4%) and Reddit (4%).
Many respondents also suggested talking to family and friends as a popular option for finding out more about investing. Over a quarter (28%) said they go to friends, whilst 20% ask their parents and 23% go to other family members. Just 7% quiz their colleagues about these matters.
Despite social and online media being a huge source of information, many people still cite traditional media as a valuable tool. Just over a fifth (22%) read the finance section in newspapers, with the same proportion (22%) choosing to use books.
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