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The Actuary The magazine of the Institute & Faculty of Actuaries

Millennials opting for ‘get rich quick’ stocks and shares ISAs

The number of trades made by 18-36-year-olds using individual saving accounts (ISAs) in 2017 is 16% greater than over the same period last year, according to research by The Share Centre.

Millennials investing more than in previous years ©Shutterstock
Millennials investing more than in previous years ©Shutterstock

Its data shows that 87% of trades made this year by millennials have been in equities, often opting for high-risk oil and gas companies in the hope of getting a quick return.

In addition, it was found that companies with a recovery story, and offering growth, made up the majority of the top five traded companies for millennials, with Ascent Resources top of the list.

The Share Centre, investment research analyst, Graham Spooner, said: “Earlier this year, we highlighted that the trading activity of millennials indicated that as a group, these investors were becoming more adventurous in their spending.

“That ethos has certainly played through until the end of the 2016-17 tax year, with four out of the top-five traded companies currently taking the form of smaller, higher-risk punts.”

“What’s encouraging is that millennials are more active than previous years, meaning there’s an ever-growing interest and attractiveness in placing their money in the stock market.”

The Share Centre data was analysed from 1 January-31 March 2017, and the same period last year, finding Lloyds Banking to be the only income-generative company to feature in the top-five traded equities.

A 5% increase in investment in funds was also recorded, which Spooner said was likely to be due to busy lifestyles causing younger people to opt for their portfolios being managed by someone else.

Regional specific funds, offering alternative global exposure, are also proving to be popular with millennials, demonstrating an appetite for investors taking opportunities in international markets.

However, it is thought that as investors from this age group get older, they will adopt a different approach, and be more drawn to less volatile shares.

“As is life, millennials will one day be considered ‘middle-aged’ and may perhaps question whether this strategy was suitable,” Spooner continued.

“When thinking about their future, and of course if they decide to move towards a more balanced portfolio, I would suggest that mid-cap companies could be the answer.

“As the blue chips of the future, mid-caps could provide millennials not only with growth potential, but the element of risk that they are clearly craving, without going to the extremes.”

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