Risky Business - Gen Z risk lockdown profits by investing for short term
New research reveals many Gen Z investors are putting their savings at risk, as nearly half (49 per cent) are investing their money for less than 5 years.
New research from Barclays Smart Investor reveals that many Gen-Zers are taking a riskier approach to investing, looking to “get rich quick” by investing for the short-term.
Short and sweet is the aim of the game for 18-24 year old investors, with nearly half (49 per cent) planning to only invest money for 2-5 years. Over a fifth (21 per cent) of Gen Z investors say they are investing to take advantage of the market and 16 per cent plan to ‘play the markets’ to get rich quick.
This short-term investment view is not shared by older investors. Millennials are more life-goal motivated, with 31 per cent investing towards a specific goal, such as buying a house. Nearly two thirds (60 per cent) of over 55s say they are investing for their long-term future and, on average, 45-55 year olds are planning to invest their money for over 10 years.
Younger generations have taken more risk with their investments over the last year, with 30 per cent of 18-24 year olds admitting to upping their risk appetite, compared to only 18 per cent of 35-44 year olds. The last year has also seen younger investors pick up investing habits that are traditionally viewed as unfavourable - a quarter (25 per cent) of Gen Z investors admit to checking their portfolio more often, a fifth (17 per cent) are placing trades more frequently and 14 per cent of young investors admit to making more speculative investments since the start of the pandemic.
Rob Smith, Head of Behavioural Finance at Barclays Wealth, said: “It’s great to see an increase in young people interested in investing, but it’s worrying to hear that so many Gen-Zers are looking for a short-term win, rather than investing for the long-term through a balanced portfolio. The last year has seen many people enter the market for the first time and, if you’ve done well, it’s often easy to assume that you can replicate your success in the years to come – but that’s not always the case.
“Just as markets rise, so can they fall and by investing money that you may need for the short-term, you increase the chance that you’ll be forced to sell at a less favourable point in the market and end up with a loss – potentially putting you off investing again. This is why one of the golden rules to investing is to try and commit for at least 5 years – to give yourself the best chance of riding out any dips in the market.
“We often hear that younger investors are drawn to investing for the excitement of the markets – but the highs and lows can be incredibly stressful if they come around too often, and so it’s best practice to sit back and not check your portfolio too often. If you enjoy the buzz of investing, think about creating a “satellite” portfolio by setting aside a small pot of money to invest in higher-risk, speculative investments whilst keeping the bulk of your investments in safer, lower-risk options. This means that you can still have a bit of fun and try out different approaches, without taking on too much risk.”
Notes to editors:
All data, unless otherwise specified are taken from 2,007 respondents of a representative sample size conducted by Censuswide in March 2021 – all respondents were 18+ and had previously invested money.
Censuswide abides by and employ members of the Market Research Society which is based on the ESOMAR principles.
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