Millennials are taking advantage of emerging financial technology to out-invest their parents and grandparents, according to a new report.
Despite the common belief that millennials are less financially savvy than older generations, new research from peer to peer platform ArchOver has discovered that the use of fintech is inspiring young people to find high-return investments and maximise their returns.
The report, titled ‘Next Gen: Investors and Savers’ found that 35 per cent of 18-34-year-olds invest or save more than £250 per month, compared with just 25 per cent of Baby Boomers (over 55 years old), and 26 per cent of Generation X-ers (35-55-year-olds).
Meanwhile, almost six in ten (59 per cent) of millennials use technology and automated services to guide their finances and help with their investing. Only 40 per cent of over-35s do the same.
“Despite claims that millennials are stuck in a financial rut, trapped by high property prices and low-wage growth, this is a generation that has grown up in an era of record-low interest rates and recognise the need to secure better returns on their disposable income,” explained Angus Dent, chief executive of ArchOver.
“On the other hand, those aged over 35 are at risk of missing out on new avenues offering higher returns.”
“Gen X and Baby Boomers could benefit from following in the footsteps of millennials and introducing greater diversity into their investment portfolios to seek out higher returns.”
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Two thirds of those surveyed said that they would identify themselves as savers, rather than investors, suggesting that many fintech users are opting for deceptively ‘safe’ banking options like savings accounts and pension funds to sit on their cash.
However, the ArchOver report found that younger people are generally a lot more willing to take on additional risk than the older generations, with 57 per cent of millennials stating that they were happy to use alternative forms of investment that hold a higher level of risk.
By comparison, only 29 per cent of Gen X investors and 14 per cent of Baby Boomers said that they would be comfortable with alternative investing.
The report also highlighted the different attitudes towards risk between the various generations. While 52 per cent of millennials associate the words ‘risk’ and investment’ with opportunity, 55 per cent of Gen X-ers associate it with ‘discomfort’ and 58 per cent of Baby Boomers associate it with ‘uncertainty’.
“The older generations could learn something from following the behaviour of a new generation,” added Dent.
“Millennials, who grew up during the deepest and longest recession in recent history are proactively looking for ways to balance security and risk in order to maximise returns but without putting their capital in too much danger. In an effort to secure higher yields, they are tackling the difficult financial climate head-on.”