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Pandemic breeds new generation of investors

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The pandemic is breeding a new generation of active and purpose-driven investors in their late 20s and early 30s who are keen to do more and do good with their money, according to new research published today by Nutmeg. 

The pandemic is breeding a new generation of active and purpose-driven investors in their late 20s and early 30s who are keen to do more and do good with their money, according to new research published today by Nutmeg. 

The research, on the impact of the Covid-19 outbreak on consumer attitudes towards money and investing, reveals that those aged 25-34 are set to emerge from the pandemic feeling wealthier, more financially confident and determined to use their money to do good, more than any other age group.
 
According to the research from Nutmeg, based on a survey of 2,000 people across the UK, the pandemic is leading to significant shifts in the attitudes and behaviours of young adults towards their money. Of those 25-34 year olds that hold investments, 60 per cent have put more money in investments over the last year – versus 38 per cent of the population.
 
Many more are also aligning their finances with their values, with one in four (25 per cent) 25-34 year-olds saying they are much more likely – since the virus outbreak – to seek out socially responsible investments, compared to 11 per cent of people overall, and just 8 per cent of people aged 45 to 54. Nutmeg data also supports this growing trend. In 2020, 42 per cent of all new investors joining the platform were from the 25-34 category, a 58 per cent increase from 2019. From an ethical investment standpoint, the number of new investors in general choosing socially responsible investment portfolios in 2020 doubled year-on-year.
 
These new attitudes and behaviours are being driven by a more positive financial outlook for millennials since the start of the pandemic in early 2020. According to Nutmeg’s research, 43 per cent of 25-34 year olds feel financially better off now than a year ago, compared to 29 per cent of people overall. Confidence is also growing, with 45 per cent of this age group feeling more confident about their finances now than before the pandemic, while the figure for the population overall is 24 per cent.
 
For adults across the UK, the top financial priority in the wake of the pandemic was feeling financially stable (52 per cent). Meanwhile, the pandemic has brought into sharp focus the importance of having a ‘rainy day fund’, with one third (33 per cent) of Brits citing ‘creating savings for life’s unforeseen events and emergencies’ as their key money focus in light of Covid.
 
James McManus, chief investment officer, Nutmeg, says: “The Covid pandemic has caused financial difficulties for many people across the UK, but it’s pleasantly surprising to see the extent to which many young adults look set to emerge from the pandemic in a stronger financial position, and how much financial attitudes have been changed by the pandemic.
 
“Given millennials represent the largest age group in the UK, after baby boomers, these shifts in behaviour and attitudes towards investing are particularly significant and represent a huge opportunity for wealth creation – at both an individual and national level. The onus is on us as providers to harness this new appetite. This means providing access to the right products – especially those which meet a growing focus on socially responsible investing – guidance and tools to enable individuals to meet their financial goals and support the rebuilding of the UK economy as a whole.”
 
The research also indicates that a more speculative DIY investor is emerging from this young millennial group, with more than one in five (21 per cent) 25-34 year olds saying they are much more likely since the start of the pandemic to make and manage investments for themselves, compared to just 8 per cent of the population overall. Similarly, and reflecting the level of public attention on corporate behaviour during the pandemic, 22 per cent of 25-34 year olds say they are much more likely since the virus outbreak to invest in specific companies they see or hear about. This compares to 9 per cent of the overall population, and just 2 per cent of 45-54 year olds.
 
McManus says: “It’s promising to see younger adults actively engaging with investing and thinking about their long-term investment goals. While there’s a cautionary tale in recent meme stock rallies of the perils and pitfalls of short-term speculative stock-picking which is more akin to gambling than investing, it is promising to see many younger investors indicating a long-term shift in behaviour and a focus on companies and sectors doing good.”
 

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