A report published in December last year from the Financial Conduct Authority (FCA) found that 66 per cent of young investors, aged 18 to 40, spent less than 24 hours deciding on an investment, while 14 per cent finalised their decision in under an hour. Perhaps, most worryingly, two in five investors said they regretted purchasing a ‘hyped’ investment product.
Sam Crone, Relationship Manager at Julius Baer International warns against these get-rich-quick schemes. ‘The ability to instantly trade and speculate online or with apps has almost gamified the process of investing, meaning many younger investors don’t fully appreciate the risks.’
Crone adds, ‘Digital assets have been an asset class many young investors have speculated on in recent years, but there are severe risks involved. And the idea of timing the market is a myth. Investors should not lose focus that the ultimate priorities should be protecting and growing their wealth, which is best achieved by staying invested for the long term, and a well-diversified portfolio with ongoing risk management is key to this.’
At a time when young investors are at an all-time high – a report last year showed that 38 per cent of 18-25-year-olds reported holding investments, the highest proportion across age groups – the experts are also seeing other trends emerging, showing how this new generation are upending traditional investment strategies.
Chris Ottenritter, Head of Wealth Advisory at JP Morgan Private Bank reveals that the younger investor is embracing ‘a more holistic perspective’ to investing. ‘They are aiming for their entire wealth plan to reflect their goals and values. Unlike previous generations, the next generation has an increasing appetite to craft investment portfolios that serve a dual purpose: generating returns while aligning with their personal values.’
This shift is seeing the younger investor seek out less traditional investments. Caroline Kitidis, Global Head of UHNW, HSBC Global Private Banking tells Tatler, ‘A few themes where we are seeing younger generations interested right now are: sustainability, AI and cryptocurrency. We are also seeing young investors using their own personal networks for investments – so they are more open to each other’s private deals and other club deals.’
Kitidis adds: ‘Typically, younger investors have been more focused on investing with purpose, and investing where there is clear social benefit. Having said that, generating financial returns is still a key driver of investment decisions, so balancing the two is important to get right.’
Kitidis also notes that AI has been a hot topic for clients. ‘This is an area we see huge promise going forward. Picking the right investments and balancing the risk is key – as this area continues to emerge.’
Interest in cryptocurrencies continues to dominate too. ‘Although we don’t advise on this space, we do get requests on this topic. Almost all these requests come from investors in their 20s and 30s. Given this is newer financial technology, younger investors are attracted to the headlines and volatility,’ says Kitidis.
