In a recent study conducted by Charles Schwab in the UK, a striking generation gap emerged among UK retail investors, revealing that Gen Z and millennial investors are adopting more active and open investment strategies than their older counterparts.
This new generation of investors, dubbed “Gen T” for their trader-like behaviors, is reshaping the investment landscape.
The research highlights that younger investors are making more regular changes to their portfolios. 58% of Gen Z and Millennials make trades and adjustments each month, nearly double the rate of Gen X and Boomers at 38%. Furthermore, 8% of younger investors make daily changes, compared to only 4% of older investors.
Copy trading, a style of investing that allows individuals to automatically mirror positions taken by other investors, is also gaining popularity among younger generations. 77% of Gen Z and Millennial investors already use or are considering copy trading, while only 49% of Gen
Richard Flynn, UK managing director of Charles Schwab, commented: “We are seeing a clear gap emerging between the more experienced retail investors and those who have recently entered the space. It will be interesting to see whether Gen T returns rise.” “Stronger investment performance, and whether this is the beginning of increased interest in UK trading.”
However, a TopBrokers study last year suggested that Millennials and Generation Z may be the weakest investing generations in recent decades. Although they have a greater appetite for risk, they have not yet proven their ability to compete with baby boomers.
Influencers are not very influential
The study also revealed a very interesting trend that contradicts current beliefs about the younger generation of investors.
Since late 2021, the influence of finance-focused social media influencers has diminished by 13% among Gen Z (down from 50% to 37%) and by 10% among Millennials (down from 52% to 42%). Meanwhile, celebrities who share their investment strategies saw their influence decline by 19% among Millennials (from 51% to 32%) and by 10% among Gen Z (from 45% to 35%) over the same period.
A year ago, a separate study by the Cyprus Market Supervision Authority revealed that more than 30% of retail traders rely on advice and ideas from financial influencers.
Embracing global opportunities and diverse asset classes
Young investors are showing a greater appetite for offshore investments and a wider range of asset classes. 69% of Gen Z and Millennials believe there are good investment opportunities in foreign markets, compared to 55% of Gen X and Boomers. This trend extends to American investments, where 71% of young investors find them attractive, compared to 62% of older investors.
Gen Z and Millennials are also more open to investing in lesser-known asset classes. 64% of them believe that futures contracts are a good investment option, while 26% of them already invest in them. In contrast, only 10% of Generation X and Boomers currently invest in futures, and less than half consider them to be viable investments. Likewise, 65% of younger generations are willing to consider fractional stocks, compared to 42% of older investors.
“The younger ‘Generation Trader’ group welcomes a wider range of investment opportunities, whether in offshore markets or in lesser-known asset classes, while later in life investors are more likely to stick with what they know,” Flynn added.
Charles Schwab conducted an online survey to gauge UK investors' views and actions amid prevailing market conditions. All participants over 18 years of age have investments in at least one asset class or financial instrument. This study, which concluded in February 2024, collected insights from 1,000 UK participants.
In a recent study conducted by Charles Schwab in the UK, a striking generation gap emerged among UK retail investors, revealing that Gen Z and millennial investors are adopting more active and open investment strategies than their older counterparts.
This new generation of investors, dubbed “Gen T” for their trader-like behaviors, is reshaping the investment landscape.
The research highlights that younger investors are making more regular changes to their portfolios. 58% of Gen Z and Millennials make trades and adjustments each month, nearly double the rate of Gen X and Boomers at 38%. Furthermore, 8% of younger investors make daily changes, compared to only 4% of older investors.
Copy trading, a style of investing that allows individuals to automatically mirror positions taken by other investors, is also gaining popularity among younger generations. 77% of Gen Z and Millennial investors already use or are considering copy trading, while only 49% of Gen X and Baby Boomers show interest in this approach.
Richard Flynn, managing director of Charles Schwab UK, commented: “We are seeing a clear gap emerging between the more experienced retail investors and those who have only recently entered the field. It will be interesting to see whether Gen T’s higher returns lead to stronger investment performance, and whether “This was the beginning of increased interest in trading in the UK.”
However, a TopBrokers study last year suggested that Millennials and Generation Z may be the weakest investing generations in recent decades. Although they have a greater appetite for risk, they have not yet proven their ability to compete with baby boomers.
Influencers are not very influential
The study also revealed a very interesting trend that contradicts current beliefs about the younger generation of investors.
Since late 2021, the influence of finance-focused social media influencers has diminished by 13% among Gen Z (down from 50% to 37%) and by 10% among Millennials (down from 52% to 42%). Meanwhile, celebrities who share their investment strategies saw their influence decline by 19% among Millennials (from 51% to 32%) and by 10% among Gen Z (from 45% to 35%) over the same period.
A year ago, a separate study by the Cyprus Market Supervision Authority revealed that more than 30% of retail traders rely on advice and ideas from financial influencers.
Embracing global opportunities and diverse asset classes
Young investors are showing a greater appetite for offshore investments and a wider range of asset classes. 69% of Gen Z and Millennials believe there are good investment opportunities in foreign markets, compared to 55% of Gen X and Boomers. This trend extends to American investments, where 71% of young investors find them attractive, compared to 62% of older investors.
Gen Z and Millennials are also more open to investing in lesser-known asset classes. 64% of them believe that futures contracts are a good investment option, while 26% of them already invest in them. In contrast, only 10% of Generation X and Boomers currently invest in futures, and less than half consider them to be viable investments. Likewise, 65% of younger generations are willing to consider fractional stocks, compared to 42% of older investors.
“The younger ‘Generation Trader’ group welcomes a wider range of investment opportunities, whether in offshore markets or in lesser-known asset classes, while later in life investors are more likely to stick with what they know,” Flynn added.
Charles Schwab conducted an online survey to gauge UK investors' views and actions amid prevailing market conditions. All participants over 18 years of age have investments in at least one asset class or financial instrument. This study, which concluded in February 2024, collected insights from 1,000 UK participants.