Crypto investing is big news. And new research by smart finance app W1TTY reveals that many young investors prefer crypto investments rather than pension investments. W1TTY’s research shows that 34% of investors aged 18 to 24 years old would rather invest in cryptocurrency. A further 30% aren’t sure whether they prefer crypto or pensions.
Here, I take a look at the research showing how young investors feel about crypto and pension investing. I also explore the influence of social media on young investors and why they should consider diversifying their investments.
Young investors prefer crypto
New research shows that 34% of 18 to 24 years olds prefer investing in cryptocurrency like Bitcoin, over traditional investments. The figures are even higher for young men, with 46% preferring crypto to retirement savings, compared with 27% of young women.
The figures come from research by smart finance app W1TTY, which surveyed 2,000 18 to 24-year-olds in the UK on their financial habits and attitudes towards savings and investments.
A further 30% of 18-24-year-olds aren’t sure whether they would rather invest in cryptocurrency than a pension, suggesting a concerning knowledge gap around personal finance and investments among the generation.
Young investors feeling bullish
The research suggests that many young investors aren’t aware of the risks of crypto investments. Only 9% are worried about making poor investment decisions.
Ammar Kutait, CEO and founder of UK-based fintech W1TTY, explains “While crypto may seem like an attractive asset class, it’s also an incredibly volatile one, so anyone choosing to invest in it should understand the risks involved. As we saw last year, impressive gains can be met with sudden, sharp declines.”
More advice is needed on crypto investing
Many younger investors also feel unsure about how crypto works and would value some guidance. Almost a fifth (18%) want their bank to provide support and advice on investing in digital currencies.
The influence of social media
For many young people, social media and the Internet have become go-to destinations for financial advice. Research shows that 24% of Gen Z seek financial advice on social media and 33% of use Google to access financial advice. A worrying 10% don’t seek any financial support whatsoever. Meanwhile, in 2021 alone, there were 4.4 billion views of TikTok posts with the hashtag #personalfinance.
The power of long-term investing
The lack of focus on retirement and pension savings is a missed opportunity for young investors. In fact, it’s long-term investing that is often the best way to build retirement wealth. The power of compounding means that investments made when you’re 18 in a stocks and share ISA or a pension scheme could be worth far more than when you’re older.
For example, £200 per month invested between the age of 18 and 70 years old could turn into £813,253 by the time you retire. In contrast, £400 per month invested between the age of 40 to 70 years old would only be worth £391,702 at retirement.
If you save into an employer’s pension, then those figures will be even higher. You’ll also benefit from tax relief and employer’s contributions.
The importance of diversifying
Most experts agree that it’s important to aim for a diversified investment portfolio. That means your investments will be spread between different assets classes and geographies, not just crypto. As Ammar Kutait explains, “It’s important for young people to diversify their portfolios. Spreading their finances across traditional investment vehicles and alternative assets is just one strategy they should be considering.”
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Investing in Cryptocurrency is extremely high risk and complex. The Motley Fool has provided this article for the sole purpose of education and not to help you decide whether or not to invest in Cryptocurrency. Should you decide to invest in Cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.
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About the author
Alice is a Suffolk-based personal finance writer specialising in pensions, tax, investment and small businesses. She is a qualified Chartered Accountant and has previously worked for KPMG London and Tesco Plc.
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