Craig Baker

A third (33%) of younger people who began investing in 2020 said they did so because COVID-19 was a “wake up call” and they realised they needed a savings safety net, according to the analysis, conducted with research consultancy Censuswide. Just over a quarter began investing to secure a second source of income (26%) and to take advantage of market volatility (26%).

With more time spent indoors and online, social media has had a large effect on younger investors, with more than a quarter (27%) of the Millennial and Generation Z cohort spurred on to begin investing after seeing others doing it online.

One-in-five (21%) admitted to beginning investing simply because they were bored in lockdown and needed something to do.

The adoption of investing during lockdown comes as almost two-thirds of Brits under 34 either strongly or somewhat agreed that they have started thinking about their long-term future since lockdown (62%). A further two-thirds agreed their finances have become more important to them since the first COVID-19 lockdown (65%).

Craig Baker, head of Alliance Trust’s investment committee, said: “If the COVID-19 pandemic has taught us anything, it is to ‘expect the unexpected’ - particularly when it comes to our finances. This message has been heard loud and clear by the younger generation who have been hard hit by the uncertainty and economic fallout of lockdown measures, and they have sharpened their focus on their financial futures.

“Building a savings safety net is a vital part of this planning, and the wide shift to investing as part of this planning is one to be welcomed as long as it is sensible, measured, and focused on the long-term – which our research suggests is the case with 35% of younger respondents investing to save for a comfortable retirement.

“Long-term, diversified investments can help power up a savings pot over the years, particularly at a time when the rates available on cash savings look likely to remain at rock-bottom levels.”