As more young people turn to crypto due to disillusionment with traditional investment, Brendan Callan, CEO of Jefferies-owned trading platform, highlights how Crypto investments motivate a new generation of retail investors to engage in the stock market.
By Brendan Curran, CEO of TRADU
It is no secret that UK retail investments are struggling. The London Stock Exchange (LSE) is looking at 30 purchase bids from listed companies this year. Only 8% of the wealth held by UK adults is invested in stocks and mutual funds. This is the smallest of the G7 countries. Meanwhile, according to ONS, retail investors’ participation fell dramatically, down from 54% in 1963 to 10.8% in 2022.
LSE chief Julia Hoggett recently argued that “investments are more afraid of investing in the real economy than investing in cryptocurrencies,” and there’s the truth in it. 73% of investors aged 24-45 support Bitcoin over gold as a long-term investment, indicating the growing appeal of crypto as an alternative investment for younger investors.
With millions of people involved in investment for the first time through crypto, this positive interest should be exploited to encourage participation in the stock market. Such enthusiasm could provide a strong foundation for broader engagement with the UK financial ecosystem.
By recognizing Crypto as a gateway to financial inclusion, the government has the opportunity to broaden the horizons of young investors, build long-term market engagement, and stimulate the UK’s economy.
The appeal of cryptography
Cryptocurrency in particular is a popular option for young investors. This is because they often offer less barriers to entry than traditional markets where trading hours are limited, as they provide accessibility, transparency and high revenue promises.
The rise in crypto investment among young people is simultaneously transforming investment into an entertainment form, along with increasing gamification in the financial market. Meanwhile, social media has nurtured a community of crypto investors who feel empowered and released to make their own financial decisions. Young people appreciate this ease of access. Now all you need to get into the code is a laptop or phone. But investing in the public equity market has become equally easy, so why are young people more reluctant when it comes to this segment of this market?
Indifference to traditional assets
Alternative assets may be trendy, but a strong element of young enthusiasm comes from disillusionment with traditional funds. A 2024 Bank of America survey of over 1,000 high-net individuals found that 72% of younger generations believe they cannot achieve above-average revenue through traditional stocks and bonds. Meanwhile, a recent NASDAQ article attributed skepticism about traditional markets to lower returns, younger investors with higher risk tolerance, and an increased sense that traditional investment methods do not match their value.
Stock market barriers, such as the 0.5% stamp duty imposed on UK stocks and stocks, also discourage investors in comparison to costly assets such as alternatives and international markets. Peel Hunt’s research shows that eliminating stamp duty encourages investors to invest more in the stock market.
Evolve to move on
Young people’s confidence in Crypto Investing is a strong indication of enthusiasm for taking investments and starting to take money into work. The UK must use this enthusiasm to help young UK investors continue to engage in our stock market and thrive.
According to the new financial report, if UK households, like their peers in Sweden and Australia, invest a quarter of their financial assets in stocks and capital, they could add £740 billion in capital to the economy. However, to achieve this, education and technology are essential in providing a gateway to traditional markets.
For many young people, the appeal of crypto investment comes from its simplicity. We must highlight the great profits made in the ease of investing in the stock market, and learn from the easy accessibility of crypto investment platforms. Turning investors towards a mobile-first, intuitive investment platform and increasing transparency in fees and performance metrics can help drive confidence and engagement.
Furthermore, disposing of stamp duty on stocks can go a long way in removing barriers to retail investment, unlocking £3.5 trillion (if UK adults have as many wealth as their US peers), boosting job creation and strengthening the UK capital market.
By enabling retail investors to participate in IPOs, leveraging the higher risk appetite of young people can also encourage them to play a more active role in the market. This works to raise stock prices and increase valuation, and helps remove LSE from the list of LSEs.
Long-term investments in UK stocks should be more attractive, intuitive and comprehensive. And embracing change may be something we need to inject confidence and excitement back into our financial markets.
