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Half of 18 to 24-year-olds more risk-averse since start of pandemic

Half of 18 to 24-year-olds more risk-averse since start of pandemic

Half of 18 to 24-year-olds believe they have become more risk-averse when making financial or investment decisions since the start of the pandemic, according to a survey.

FJP Investment found 52 per cent of the youngest investors polled said they were more risk-averse, compared with 39 per cent of 35 to 54-year-olds, and 44 per cent of those aged 55 or older.

Half of 18 to 34-year-olds said they had paused on making any major financial or investment decisions in the past 12 months, with 37 per cent of 35 to 54-year-olds and 41 per cent of over 55s agreeing.

The survey was carried out by Opinium on behalf of FJP Investment between April 27 and May 17, and questioned 2,000 UK adults.

When broken down by gender, 46 per cent of women said they had become more risk-averse in the past year, compared with 43 per cent of men.

Jamie Johnson, chief executive of FJP Investment, said: “In the midst of the pandemic, it is clear that a prevailing sentiment of risk aversion has set in among investors, which has only been exacerbated by further uncertainty in the build-up to and fallout from Brexit. 

“Combined, these factors have led to a state of inertia, with investors holding fire on making any major financial decisions – indeed, many are more comfortable leaving money in savings at present, despite record-low interest rates.

“It will be fascinating to watch how, as lockdown measures are fully lifted, investors spark back into life – I expect pent-up demand and savings to be released, resulting in a flurry of investment activity in the second half of 2021.”

The survey found those with an investment portfolio of between £150,000 to £300,000 were most likely to say their aversion to risk had increased during the pandemic, with 57 per cent agreeing.

Those least likely to have become more risk averse were those with a portfolio value of £75,000 to £150,000, with 37 per cent saying they had become less tolerant of risk.

Richard Ellis, financial planner at Ellis Davies, said that many investors have been tempted to make financial decisions driven by emotion during the pandemic. 

“People don't make good decisions that are emotionally driven, when they're in emotionally vulnerable circumstances,” he said.

“I’ve witnessed in the past 12 months people with money invested in line with their objectives, and we’ve explained the risk to them and they understand. All of a sudden, they go through some emotional stresses and strains and it's almost as if all of the logic that's gone beforehand goes out the window.”

He said during the pandemic everyone was in a vulnerable situation.

He added: “A big part of what we do as advisers is to try and protect people, often from themselves, whether that's investing in scams or making bad [financial] decisions.”

sally.hickey@ft.com