Millennials 4x more likely to be P2P investors than Generation X
They didn’t vote for Brexit and don’t like Donald Trump but millennials are fintech enthusiasts.
Those aged 18-34 are four times more likely than over-55s to have money invested in a peer to peer platform, according to research by Thincats.
The P2P platform, which specialises in secured business loans, found 4 per cent of 18-34-year-olds currently have money in the emergent peer to peer sector, compared to 1 per cent over-55s.
A third (29 per cent) of millennials cite the ability to cut out banks as the sector’s biggest attraction, while 28 per cent like that they can lend directly to businesses. 23 per cent have had peer to peer recommended to them by a friend.
One of the key reasons for the peer to peer demographic split could be appetite for risk adjusted rate of return. Younger investors place much greater emphasis in earning high returns in exchange for greater risk, with one in five (19 per cent) citing this as their primary motivation when investing, compared to only one in ten (9 per cent) over-55s.
The majority (51 per cent) of over 55s are instead interested in stable returns and low volatility, compared to just a quarter (25 per cent) of millennials.
The younger generation are also far more open to innovative new investments than their older counterparts. 51 per cent of 18-34 year-olds are willing to invest in new asset classes, more than twice as many (24 per cent) as those aged 55 and over.
Kevin Caley, founder and chairman of ThinCats, says the P2P sector is still – despite strong growth - is still considered to “be something of a novel investment” by many people.
“That perceived novelty is perhaps why it has proved so popular with younger investors, but that could soon be about to change,” he said.
“With the arrival of the IFISA, we expect to see many more seasoned investors branch out from their traditional ISA holdings, including those nearing retirement, for whom the fixed income nature of these investments is well suited to their income needs.”