Vanguard's inaugural British Money Mindset Report reveals that a financial shift is happening across the UK, with a new generation of young investors moving away from traditional cash savings and towards investing. Over the last two years, more than a third (37%) of Generation Z investors (adults aged under 30), equivalent to nearly 780,000 people, have started their investment journeys. This surge has contributed around £25 billion in new investor inflows, highlighting growing interest among younger investors seeking to build wealth for the future.
What are first-time investors choosing to invest in?
The research highlights a clear generational divide when it comes to taking that first step into investing. One third (33%) of Gen Z investors chose cryptocurrency as their starting point. In contrast, this approach is far less common among older savers. Looking at specific older demographics, just 9% of Generation X and 2% of those aged 62 and over chose crypto. Instead, they tended to favour established products, with many beginning their investment journey using shares or funds.
The research warns that less experienced, younger investors may be disproportionately exposed to the volatility associated with crypto-assets. It warns that a negative early investing experience could discourage a young investor and help to reinforce existing misconceptions about investing. The report goes on to highlight the need to support younger investors in understanding the benefits of lower-risk, longer-term investment options.
What is holding first-time investors back?
While 1.5 million people have become first-time investors in the last two years, many more are waiting on the sidelines. More than two-thirds (68%) of current savers plan to start investing within the next two years. This desire is strongest among younger age groups, with 91% of Gen Z and 84% of Millennials (those aged roughly 30 to 45) expressing an intention to begin investing.
However, confidence remains a significant hurdle. The research shows that:
- 70% of non-investors say a lack of confidence in their investment knowledge is a primary barrier.
- 58% feel under-informed and unsure of how to take the first step.
Ben Summers, head of Vanguard for the UK, explained: “The most striking finding from this research is not just that more people are investing, but that millions more are on the cusp of taking their first step. That's incredibly encouraging, particularly among younger generations. But as more people begin their investing journey, it's vital they build the right foundations."
He added: "Our research shows many younger investors are starting with higher-risk assets such as crypto, reinforcing the importance of helping people understand the value of discipline, diversification and a long-term approach. There is still a clear gap between intention and action. Too many people still feel under-informed or lack confidence in their investment knowledge, despite recognising the benefits investing can bring.”
New 'Targeted' support for first-time investors
To help bridge this gap, Vanguard has launched a Targeted Support Service aimed at first-time investors. The service is designed to offer simpler guidance, practical support, and tailored journeys to help individuals overcome the 'confidence gap' and start investing with a solid foundation.
The introduction of targeted support is seen as a vital step in closing the UK’s growing 'advice gap'. Regulatory boundaries and industry caution have made financial support and guidance feel inaccessible to many, especially those with smaller amounts to invest.
Targeted support is designed to solve this by allowing firms to offer helpful, tailored guidance based on a customer's general situation, without crossing the line into costly, fully regulated personal advice. This middle ground aims to give everyday savers the reassurance they need to make better financial decisions. You can learn more about how targeted support works and how it could help you in our recent podcast episode below.
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