Gamestop phenomenon pushes millennials towards DIY investing
From bitcoin to the growing interest in day trading and the most recent Gamestop debacle a new generation of younger investors has emerged from the pandemic.
There has been a general increased interest in personal finance and savings in large part because younger generations have had the opportunity to save during lockdown.
Just under half of 25 to 34 year olds feel financially better off than a year ago while 45 per cent feel more confident about their finances, according to a survey conducted by investment manager Nutmeg.
This is translating into more investments with 60 per cent of the cohort putting more money aside compared to 38 per cent of the population.
“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,” James McManus, Nutmeg’s chief investment officer said.
Interest in sustainable investing has seen an uptick but day trading has become the story of the last few months. Reddit day traders sent Gamestop stock soaring last month in what was widely hailed as an attack on hedge funds but it speaks to a wider interest.
Low-cost retail platforms have made day trading and do-it-yourself investing all the more accessible to younger generations.
Of the 2,000 surveyed by Nutmeg, 21 per cent said they are much more likely since the start of the pandemic to make and manage investments themselves.
There are concerns among the more established players that people who have little knowledge of investing could be faced with hefty losses.
Recent research by behavioural finance experts Oxford Risk reveal nine per cent of investors are using social media to help manage their investments and seven per cent regard it as their most important source of information.
People are attracted by the promise of big gains and after a difficult year in which millions have lost their jobs, the allure is understandable.
“It’s always a very controversial phenomenon because there’s a lot of noise and there’s a lot of people who probably shouldn’t be [investing],” Max Rofagha, founder of financial information app Finimize told Morning Wire “At the same time it’s the wrong approach to discard them all. There are a whole new cohort of investors who we see as sticking around
Finimize’s own survey of its community members reveals 60 per cent of its community members were investing a year ago. It has since risen to 80 per cent as of a couple months ago.
It speaks to millennials wanting to take ownership of their investments and with the rise in sustainable investing away from passive trackers.
“This new generation of the casual investor wants to take a very active role in their investments they don’t want to just put it into a robo-adviser or a passive fund.