The team at UK’s investment platform, easyMoney, notes that you need not look too hard to find updates about how the Covid-19 crisis has negatively affected the lives of young people.
The younger generation has been among the hardest hit in many ways, according to an update from easyMoney. The company, which recently launched a Fintech app, points out that there have been positive stories to come out of the past couple years, including the rise of Generation Z and Millennial investors, “enticed into investing by new apps, financial tools, and a necessity to manage their finances and their futures.”
easyMoney writes in their blog post that during the pandemic, “around half of young people’s households suffered some form of job-related disruption and more than one in three reported financial difficulties, according to a report from the OECD.”
They were also “more likely to be working in industries, such as travel, retail, and hospitality, which were severely impacted by the various coronavirus lockdowns.”
The easyMoney team clarified that it wasn’t “just their financial situation, 52% of 16-year-olds, for example, said their mental and emotional health had worsened during the pandemic, according to a report from the Northern Ireland Commissioner for Children and Young People (NICCY).”
Although there may now be some “light at the end of the tunnel,” the lasting effects of the pandemic are also “likely to continue impacting young people for quite some time.”
But it’s among this “gloomy backdrop” that positive stories have emerged, the team at easyMoney reveals. When it comes to managing their funds, younger people “appear more engaged and interested in their finances than previous generations and more likely to want to grow their wealth.”
As noted in the update:
“There are many reasons for a rise in younger people investing. A prolonged period of being stuck at home, increased access to trading apps and technology, a lack of financial help and support from other sources, and historically low interest rates are just a few.”
There was “a 32% rise in investing in this age group during the pandemic, according to one report from the website Finder, compared to in 2018.”
A quarter of young people surveyed by the site said they had been “inspired to dip their toes in the stock market because of the economic crash following the first coronavirus outbreak.”
The report also found that three-quarters of Generation Z, aged 18 to 24, and millennials, aged 25 to 40, said they were “planning to invest within the year, compared to 60 per cent of baby boomers, born between 1946 and 1964 and 41% of the silent generation, born between 1925 and 1939.”
Young investors are also using online tools, forums, and apps to “grow their money,” the team at easyMoney noted.
They also shared that a third of those in these age groups said they “belonged to online investment forums and 41% used sites like YouTube as a source for investing information, according to another study from Magnify Money.”
Other social media platforms were also cited including TikTok, Instagram, Facebook, and 46% said they had “used social media for investing in the past month.”
The pandemic has certainly “played a hand in advancements in technology, and these have made it easier for people to access and manage their money,” the update revealed.
The company added:
“At easyMoney a new app was launched this year in response to the surge in fintech apps. As half of easyMoney’s investors access their accounts via a mobile device, it made sense to create a free app, as part of its wider plan to make the service as user-friendly as possible.”
They also mentioned that there isn’t really a specific age to “start investing, and while it’s never too late to begin, it’s generally believed that it’s better to start early.”
They pointed out that this is because investing is “seen as a longer-term process when compared to more traditional savings products.”
The easyMoney team further noted that the benefit of starting young also “means you have more time to watch your money grow.” Investing – whether that’s on the stock market or through an IF-ISA – “is likely to give you better returns than a savings account too.”
With easyMoney, for instance, you’ll get “a target rate of between 3.08% to 8.00% per annum, which is significantly more than you would get in a savings account.”
Although the rates are never guaranteed – and there is a risk of losing your money – part of the appeal to young investors “may be the chance for bigger returns.”
It must be noted that your capital “is at risk and not covered by the Financial Services Compensation Scheme (FSCS).” These are “not a cash savings account.” Instant access is “not guaranteed” and past performance “does not guarantee future results.”
Interest rates have been kept at really low levels since the start of the pandemic, “only rising to 0.25% from 0.1% in December to try and control soaring inflation levels.”
According to easyMoney, this is one of the reasons for “a surge in investors, with 67% of adults expected to buy stocks and shares in the future, mainly because of the poor returns offered by savings accounts, according to Finder’s report.”
The update also mentioned:
“Younger generations aren’t just using their investments for retirement planning either. The report from Magnify Money shows that just 36% of young investors plan to use their investments for their retirement, 35% will use it to make additional returns, while 19% said they would use it for major purchases like a house or car.”
easyMoney further noted:
“With huge rises to house prices since the start of the pandemic hitting first-time buyers hardest, this is yet another reason why younger people may be turning to investments to try and grow their wealth rather than leaving it to sit in a savings account being eroded away by inflation.”
They concluded:
“There’s no denying the financial impact the pandemic has had on younger people, and maybe this increased financial pressure has also played a hand in pushing some into investing as a way to take control of their own future and finances.”