Today’s younger investors more speculative in their investing
Vancouver – Young adults today are increasingly taking on more risk by investing in specific companies, according to new research commissioned by the B.C. Securities Commission (BCSC).
The national and British Columbia survey, conducted by Innovative Research Group, reveals how 18- to 24-year-olds are different from older adults when it comes to investing, and even how different they are from 18- to 24-year-olds of just a few years ago.
Over the past four years, the youngest adults in B.C, as well those between 25 and 34 years old, have increasingly owned stocks of individual companies. While that upward trend is present among all age groups, the increase is most pronounced among those under 35 and barely perceptible among those over 55.
Owning individual stocks – as opposed to a basket of stocks through a mutual fund or exchange-traded fund – indicates a more speculative approach to investing, as well as greater confidence by today’s younger investors in their ability to spot profitable opportunities.
“It’s natural that younger investors, given the long timeline in front of them, would be more inclined to take on more risk,” said Pamela McDonald, the BCSC’s Director, Communications & Education. “But today’s younger investors are increasingly willing to take a chance on a particular company.”
Young adults are more likely than other those 25 or older to:
- say they are aiming for a large return and a big profit
- think it’s generally possible to time the market
- trade at least once a week
- say that they often trade more to win back losses
- say that they often trade larger amounts to maintain excitement
- and say that they often are thinking of ways to get more money to trade.
Innovative Research Group used the data about behaviours and attitudes to sort investors into different types. One in five young adult investors could be described as “do-it-yourself” investors who are taking a more speculative and risky approach to investing; that type accounted for only one in 10 investors overall. Another 18 per cent of young adult investors hold only crypto and nothing else; this group amounts to just 6 per cent among all investors.
Young adults are less trusting of traditional investment professionals and are more likely to seek information on platforms like YouTube, Instagram and TikTok. Only 23 per cent of young investors work solely with advisors, compared to 40 per cent of Canadians overall.
Young adults are more likely than any other age group to self-manage some or all of their investments, with about half self-managing over 50 per cent of their investments. Young adults invest in higher-risk financial products, such as options or mortgage investments, at a higher rate than investors generally.
The COVID-19 pandemic, media exposure, economic conditions and new technologies are likely contributing to changed approaches to investing for young adults.
“This research shows young investors are following a different path than generations before,” McDonald said. “By understanding the goals and behaviour of younger investors, we can have a clearer idea of the tools and support they need to work toward a positive financial future.”
The research is available on the BCSC’s investor education website.
About the survey:
This online survey was conducted for the BCSC by Innovative Research Group among a representative sample of Canadian and British Columbians from September 26 to October 5. A total of 3,789 Canadians age 18 and over completed the survey, which was weighted to a representative sample of 2,000. The survey included oversamples of 1,385 Canadian young adults (weighted to 1,000), 1,458 B.C. adults (weighted to 1,000), and 540 B.C. young adults (weighted to 500). Weighting ensures that the overall sample's composition reflects the actual age, gender and geographical location of the Canadian population according to Census data.
About the B.C. Securities Commission (www.bcsc.bc.ca)
The B.C. Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:
- A securities market that is fair and warrants public confidence
- A dynamic and competitive securities industry that provides investment opportunities and access to capital
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Learn how to protect yourself and become a more informed investor at www.investright.org