Cryptocurrency crash is top risk for young investors in UK: research

The majority would increase their allocation to cryptocurrencies if the asset class were regulated

crypto

Cryptocurrency crash is top risk for young investors in UK: research. Source: shutterstock.com

Saxo Markets UK, the licensed subsidiary of Saxo Bank, has conducted a research revealing that retail investor participation in financial markets will keep growing in 2022, but investors are wary of the risks ahead as markets see a correction.

The biggest concern for young investors aged 18-34 years is a cryptocurrency crash.

Nevertheless, despite these fears, 56% plan to increase their investment allocation to the digital asset class, challenging the risk on/risk off setting.

An even higher percentage (59%) would increase their allocation to cryptocurrencies if the asset class were regulated.

Inflation and a more widespread stock market bubble leading to a correction were second and third respectively in terms of biggest concerns for young investors. Just a little over one in ten (13%) were concerned about the impact of the pandemic risk on their investments.

Despite the recent stock market performance, 3 in 5 young investors still plan to increase their stock investment allocation this year. 46% believe tech stocks will perform best despite well-known shares such as Netflix losing 33% of its value, Amazon 16%, Microsoft 12% and Alphabet 10%.

WFH stocks, energy stocks and meme stocks were listed second, third and fourth respectively in terms of investment performance expectations.

Young investors continue to use social media as their primary source of information, followed by news sites and forums. Just one in ten are influenced by their peer group. When asked more specifically, Reddit, Twitter and Facebook were seen as the most important media platforms for investing in 2022. Just over one in ten (12%) suggested it was Instagram, despite the increasing use of influencers to lure retail traders.

One year on from the events which saw the rise of the so-called Reddit army of traders, a quieter but more sustainable cohort of younger investors is emerging which will shape the future of investing for years to come. Many such investors have, however, not witnessed a market crash or a major financial crisis, so it is critical that alongside their increased investment activity, they not only seek credible sources of investment information but also look to diversify their holdings to ensure that any recent gains are protected rather than wiped off
Charles White-Thomson, CEO of Saxo Markets UK

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