Despite fears that young people aren’t investing enough, it turns out they are, even if they shouldn’t be.
According to new data from Hargreaves Lansdown, 70 per cent of young people who are in debt are still investing.
There are 1.8m households in arrears throughout the UK, 16 per cent of which have been making investments despite their liabilities.
However, there are significant splits of who is investing by age – only six per cent of Baby Boomers in debt, compared to 70 per cent of millenials and Gen Z.
This comes following the findings of the Financial Conduct Authority that young people continue to rely on cryptocurrencies as their source of investment.
Putting money into risky investments is not good, especially when two-thirds claim that a significant investment loss would have a fundamental impact on their current or future lifestyle.
Earlier this year, City minister Bim Afolami urged young people to back the British stock market and buy shares in Natwest rather than just pumping cash into cryptocurrency.
“The crypto ‘wild west’ is an unpredictable and financially dangerous arena but it’s still luring young people in, many of whom are hoping to make a quick buck and potentially cancel out their debts,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“For many this is likely to be wishful thinking due to the highly volatile value of coins and tokens.”
However, the high number of young people investing while in debt is likely because they’re more likely as a group to be in debt.
Young adults face the highest levels of non-mortgage debt of any age group, averaging around £10,400.
Meanwhile, only six per cent of 18-34 year olds said they were coping very well financially, compared to 41 per cent of those 75+.
If we don’t want young people to be investing while in debt, this runs up against the stated goals of the finance industry to make investing more accessible and pushing young people into the market.
The data is similarly split when examining household income, though not by quite as wide a margin.
28 per cent of those in the lowest income quartile said they were investing while in debt, compared to 10.5 per cent in the high income quartile.