It’s who you know: family and friends are key to getting started with investing

Family is the main trigger to becoming an investor for young people with 39% saying a discussion with or recommendation from a family member led to them starting to invest, according to research¹ by the Association of Investment Companies (AIC) among investors aged between 20 and 40.

Other triggers include a build-up of savings (36%), low savings account rates (24%), and seeing something online that sparked people’s interest (24%).

Friends and colleagues are also important, with 23% of respondents saying they started investing after a conversation with or recommendation from a friend or colleague. Three-quarters of young investors know someone else who invests, with most of these naming friends.

Just over half (56%) of young investors have over £5,000 invested and this rises to 68% for those aged 30-39 years old. The majority (52%) usually use an online platform to invest, 17% use a bank or building society, 13% use a financial adviser and 11% an online investment service such as Nutmeg or Wealthify.

Stocks and shares followed by cryptocurrency are most popular investments

When considering different types of investments, investors are most aware of individual stocks and shares (89%) and nearly two-thirds (65%) of young investors hold these. Cryptocurrency comes second with more than three-quarters of young investors (77%) aware of it and half (50%) holding cryptocurrency. Interestingly, 59% of young male investors hold cryptocurrency, versus only 43% of female respondents.  

Nearly three-quarters (73%) of young investors are aware of bonds and 28% hold them. Premium bonds also score well on awareness (62%) and they are held by 24% of young investors. Investment funds have higher levels of awareness (47%) than exchange traded funds (ETFs) (43%) but slightly more young investors have ETFs (21%) than investment funds (19%).

Forex (foreign exchange) has a higher level of awareness amongst young investors (38%) than investments through crowdfunding platforms (34%) and investment trusts and index tracker funds (both 33%). However, the number of young investors holding these different investments is very similar with 11% opting for forex, 9% accessing investments through crowdfunding platforms, 11% holding investment trusts and 12% using index tracker funds.

Feeling interested and excited – checking investments regularly

Young investors are highly engaged. Over half (57%) had checked their investments during the last week and a further 29% had checked their investments during the last month. It’s therefore not surprising that these investors feel positive towards investing with 59% interested, 46% excited, 30% empowered, 27% confident and 21% calm. However, 30% of men felt calm in comparison to just 13% of women. Despite these upbeat feelings, 42% of investors felt cautious and 14% were worried about investing.

Nearly three-quarters of young people want to retire early, with 76% looking to retire before the state pension age of 66.

An optimistic 14% are planning to retire before they are 51 years old and an additional 15% expect to retire before they are 56.

Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC), said: “Friends and family who invest have a key role to play in encouraging the under-40s to start investing. Friends, family and financial advisers are also the main sources of information for younger investors. It’s encouraging that these investors are engaged and interested, with two-thirds holding individual stocks and shares. But the popularity of cryptocurrency and forex trading suggests that some young investors are risking getting burned before they can build up much investment experience.

“It’s not surprising in these tough times that the cost of living crisis is the biggest barrier to investing for three-quarters of investors in their 20s and 30s. Worries about markets and poor economic conditions are also common. Women are particularly cautious, with a fifth of female respondents concerned about their lack of understanding of investments in comparison to 9% of men.

“The investment industry clearly needs to do more to help young investors learn about the different investment choices. One option for young investors to consider is investment trusts. These are a type of fund listed on the stock exchange which you invest in by buying and selling their shares. They offer strong long-term performance and access to a wide range of assets, from technology, renewable energy and private companies to global and UK shares.”

Where do young people go for investment information?

Young investors rely most on people for their investment information with 22% of all respondents relying on friends, 20% using a financial adviser, 14% turning to other family members and 13% asking their parents. Social media is the second most popular source of investment information with YouTube the most popular channel (used by 24% of all respondents) followed by Instagram (14%), Reddit (11%), Twitter (10%) and Facebook (9%).

Traditional media is used by 36% of young investors, with 22% of all respondents poring over the finance sections of newspapers and 20% using books for their information. A quarter of all respondents (25%) use online search engines such as Google.

Barriers to investing – the cost of living crisis

In the current difficult economic environment, the cost of living crisis is the main barrier to investing, affecting three-quarters (75%) of young investors. Being worried about markets and poor economic conditions is the second obstacle, influencing 41% of respondents. Just over a fifth (21%) are concerned about low returns and for 16% lack of understanding is a barrier. Over a fifth (21%) of women are concerned about their lack of understanding in comparison to just 9% of men.

Stocks and shares ISAs most popular

When it comes to investment products, stocks and shares ISAs come out on top with 61% of young investors having these, although more men (69%) have one than women (55%). Next most common was a workplace pension (46%) and then a cash ISA (30%). Self-invested personal pensions (SIPPs) are held by 17% of young investors and various types of ISAs are held: cash Lifetime ISAs (17%), stocks and shares Lifetime ISAs (16%) and Help to Buy ISAs (15%). Just over a sixth of respondents (16%) have a general investment account, 12% have an investment trust share plan, and Child Trust Funds and Junior ISAs are held by 13% and 11% respectively.

To find out more about investment trusts, also known as investment companies, see the AIC’s guide.

- ENDS -

Follow us on Twitter @AICPRESS

Notes to editors

1. The research among young people aged between 20 and 40 who currently invest was conducted on behalf of the AIC by Research in Finance. It included an online survey of 418 investors with an even split between 20-29 year olds and 30-39 year olds. The online survey was conducted between 13 October and 31 October 2022. The research also included in-depth interviews with 14 investors, which were conducted between 5 September and 14 September 2022.
2. The Association of Investment Companies (AIC) represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s vision is for closed-ended investment companies to be considered by every investor. The AIC has 349 members and the industry has total assets of approximately £268 billion.
3. For more information about the AIC and investment companies, visit the AIC’s website.
4. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance.  The value of investment company shares, and the income from them, can fall as well as rise.  You may not get back the full amount invested and, in some cases, nothing at all.
5. To stop receiving AIC press releases, please contact the communications team.