New study reveals what 20-35 year olds are investing in. Number 5 will surprise you!

While millennials and GenZ can sometimes be wary about investing and in many cases they have little capital to work with, the availability of social media and online investment tools is making it easier and more accessible for this age group to learn more about investing. In fact, during the pandemic, 16% of Britons aged 18-24 began investing for the very first time, while the same was true for 10%  across all age groups, according to a Halifax survey. 

In Australia, the so-called first-time online investing phenomenon has stretched to almost half of all Australian Millennial and Generation Z consumers during the pandemic. Spare time was cited as the top reason young investors made the push into online investment markets. But what exactly are young people investing in and why? 

 #1 401(k) Plans and Investment Accounts

Younger generations have a lot to consider when identifying the right investment account, like entry fees, commitment, and long-term goals. While some millennials invest in traditional or Roth individual retirement accounts (IRAs), 401(k) plans are the simplest choice. They are offered directly by employers and use payroll deductions to build up the accounts. However, Social Security and company pension plans are becoming less and less popular—especially since 401(k) plans shift much, if not all, of the savings burden onto the employee.

 #2 Buying Real Estate

Even before the coronavirus pandemic, the “American dream” of homeownership was difficult to achieve. But for many millennials, the goal of buying a house now seems increasingly distant, and while the majority states that homeownership is in their financial agenda, a recent Bankrate survey found that nearly 60 percent of Americans aged 18 to 34 have put off this major financial goal, because of the pandemic.

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 #3 Paying Out Debt 

With a great number of young adults being saddled with debt, such as student loans, paying out their debt is a form of investing, too. Debt payments can give a guaranteed rate of return, similar to buying a bond. For example, wiping out the balance on a credit card with a 16% interest rate is equivalent to earning a 16 percent return on that money, just by virtue of not having to pay those charges.

#4 Investing in their Career or Start-Up

Building financial security isn’t just about saving; younger generations are also looking for ways to keep their income growing. That may mean changing jobs, perhaps by switching employers, starting their own business, or shifting to a new industry. According to a recent Gallup survey, millennials are three times more likely than older generations to say they’ve changed jobs within the past year.

 #5  Investing in Stocks and Cryptocurrencies 

Over 4 in 10 millennial investors cited the accessibility of trading apps as the main reason for their interest in online investing, and a third appreciated the low costs. The most popular reason for people looking to invest online is the poor interest rates that savings accounts currently offer. Charlie Barton, banking and investment specialist at personal finance comparison site, comments: “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 simply too low, so it is logical that people will look elsewhere to grow their longer-term wealth.”

Digital investment platforms also feature lower investment minimums making it easier to get started with a small deposit. Plus, there are no awkward or time-consuming meetings required; everything can be done via an online platform designed for a simplified, yet optimized user experience. 

Cryptocurrencies are the Digital Assets of Choice

Once they find the right online investment platform, young investors are increasingly likely to trade in speculative assets such as cryptocurrencies compared with traditional investments such as equities or bonds, according to the latest Investment Forces research from Charles Schwab UK.

“Investing has radically changed since my parent’s generation,” says Richard Vibert, a Millennial venture capitalist who recently relocated from Hong Kong to London. “They thought in terms of saving from a young age to buy a house. Our generation is more interested in investing in assets like cryptocurrencies that you can buy via an online platform, rather than owning a home.”

The Charles Schwab research also reveals that more than half of millennial and Gen Z investors (51%) trade in cryptocurrencies, a large increase from when this research was last undertaken in May 2020, where 44% of young investors traded cryptocurrencies. The rise in popularity of these products means the 18-37 years demographic are now more likely to trade cryptocurrencies than stocks. 

For young adults looking to invest in cryptocurrencies, security and advantageous conditions are cited as the most important factors when selecting a trading platform. Increasingly, younger investors opt for new cryptocurrency exchanges with more favorable conditions that enable them to trade multiple cryptocurrencies but also combine free research and trading tools. DXone is one such platform that enables users to customize their own crypto-research dashboard using unique widgets while also offering 1000 free DX1U tokens to all verified users. The platform allows for seamless crypto trading and investing through a series of tools from limit orders to simple crypto to crypto exchange tools. You can register for free by following the link below.

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