Many members of the new generations, to call them somehow, are quite involved in the trading world, more than one might think. This is thanks to the fact that they are digital natives, who manage multiple platforms and apps to make investments. Here we will find out what their preferred markets are and what young people are investing in today.
What do we mean when we talk about young people?
The UN defines as young people those whose ages are between 15 and 24 years. It is estimated that there are currently about 1250 million, which represents more than 15% of the world’s population.
However, we are also talking about a group in which the vast majority have just graduated and have barely started on the job market. So they usually have little capital to invest yet; unless they are people who have received a family inheritance.
That’s why, in the case of finance or trading, it is preferred to talk more about the sub-30, to refer to those who are below this third-decade boundary. These digital natives naturally handle new technologies, which makes it easier for them to enter the world of trading.
What young people are investing in?
It might be surprising not only to know what young people are investing in today but even to know that this age group is interested in trading, more than we might think.
And maybe we are used to seeing this as an activity of adults or a little older people, who already have the capital to start and who are mature enough to move into the complicated world of finance.
Of course, there are substantial differences between the markets and the type of investments made by each age group, even the risk they are willing to take. Let’s see, then, what young people are investing in today.
Stocks are a market that generates interest for the under-30s, as for most members of the other age groups. However, a particularity that can be observed in the younger ones is their predilection for technology companies.
Among the first places of this preference can be mentioned the shares of the following companies:
Another trend that can be noticed in these mentioned stocks is that they are not only of technological companies, but they are well-known brands. It follows that there may be a marketing element behind this choice.
And the fact that they do not choose other more profitable stocks, but from companies that are to some extent less well known or renowned, shows that at this age, when you have been in the markets for a short time, you are mainly familiar with the names that have the most buzz.
This is another market in which young people invest and that arouses their interest a lot. In fact, according to a survey published on BBVA Asset Management, cryptocurrencies are the preferred ones (with 55.7% of the total), while stocks are in second place (50%) and investment funds are third (39.4%).
Additionally, almost three-quarters (74%) admitted to having ever invested in this type of digital asset. There are several reasons that would explain this preference. For example, it is thought that there may be some influence of video games, where they pay with tokens, so they are getting acquainted with them.
However, this preference is not exclusive to this age group. The S&P Dow Jones Indices state that, although this is a volatile market that fluctuates frequently, its market capitalization is estimated to be equivalent to USD 798 billion at the end of 2022.
Among the other instruments that are most sought after by young people when investing, we find low-cost ETFs, energy (oil and gas), gold, and real estate. Deposits and some derivatives (mainly futures) follow in a smaller percentage.
Finally, it is worth mentioning the emerging companies or startups. These are usually invested in by young people who are entrepreneurs themselves, who bet on their own innovative idea and also work for it.
How do young people invest?
Another point that we can highlight, with respect to the investments that young people make today, is the way or the mechanisms, as well as the amounts destined to these values mentioned above.
In this sense, those who do not have time, do not have experience as well as those who are initiating, they prefer to operate through platforms that work as if they were automatic investment funds, such as Quiena.
On the other hand, it is pointed out that the amount invested by young people is relatively low, as these are people who are just starting out. 42.5% invest on average between 1,000 and 5,000 euros, according to the aforementioned survey. And less than 10% invest more than 10,000.
Youth, divine treasure
The biggest disadvantage of young people when investing is obviously their inexperience, which means a greater predisposition to be potential victims of scams. However, this can be prevented by investing in reliable brokers.
On the other hand, young people have the advantage that they can take more risks, because they have more time to recover, and even to place longer-term bets.
And, of course, one of the greatest strengths of starting to invest at this age is that you also have the opportunity to learn how to trade, and the way it should be done: in practice. So, as with many other things, the sooner you start, the better.