The majority of young investors believe the pandemic presents new opportunities to invest in emerging markets that stand to thrive in the ‘new normal’, while older investors are shying away, new research by broker HYCM has found.
The trading broker commissioned an independent survey of 815 UK-based investors, all of whom have investments in excess of £20,000, excluding the value of their residential property, savings and workplace pensions.
It found that 62% of younger investors (aged 18-34) are confident they will emerge from the pandemic in a stronger financial position before – this is compared to only 30% of those aged 55+ and 43% of investors overall.
An opportunity to invest in emerging markets
When surveyed about their investment outlook for 2022, the majority (61%) of young investors said they view the pandemic as an opportunity to invest in emerging assets and markets that stand to thrive in the ‘new normal’. Older investors were more risk-averse, with just 12% showing the same enthusiasm for new investment prospects driven by Covid-19.
HYCM’s research also showed that 57% of younger investors said climate change issues and global warming are likely to affect their investment strategy in the coming year, with similar numbers (56%) also saying that they will prioritise environmental, social and governance (ESG) investments within their strategy for 2022. These figures drop to just 15% and 16% among older investors, respectively.
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Although 58% of younger investors said they had been making more short-term financial decisions throughout the pandemic due to prolonged market uncertainty, the vast majority (70%) did add that they are confident in how they are managing their finances and investments in the current climate. This figure is almost on par with that of their older counterparts (75%).
Younger investors are making the most of the opportunity
“After a tumultuous couple of years, it’s a pleasant surprise to see that the pandemic is breeding a new generation of investors keen to do more with their money, despite the challenges that persist,” said Giles Coghlan, Chief Currency Analyst at HYCM. “Clearly, younger investors are adopting a trader’s mindset, making snap-quick judgements about their finances and investments in reaction to a changing economy, where inflation is running hot and interest rates are rising fast, as well as making the best of new opportunities born out of the pandemic.”
According to HYCM’s research, in some cases, younger investors actually seem more attuned to the changing markets and are more confident about what to do with their cash than their older, more experienced counterparts. The alternative interpretation is that younger investors have grown accustomed to stunning stock market returns that are unlikely to be sustained and their optimism stands to be dashed by slowing growth.
It is also interesting to note the disparity when it comes to ESG investing. Climate concerns are not going away any time soon, and younger investors – whether through a sense that opportunities await, or perhaps through a passion for ethical, sustainable investments – are evidently particularly focused on this investment sector.