Cryptocurrencies are still fledgling assets and new research shows it is the youngest generation of investors that has the best understanding of the sector.
Research by British legal firm Michelmores LLP into affluent millennials - the generation born between 1981 and 1996 - with investable assets of £25,000 ($31,000) or more, shows that 20% have invested in cryptocurrecies such as bitcoin.
This far surpasses the national average of 3%, and even rises to 29% for millennials with more than £75,000 ($93,000) worth of investable assets.
Millennials also take their investments seriously - putting in their own research - and are more likely to engage with investment firms and exchanges electronically, with 35% saying they invested through digital and online platforms, while 27% said they consulted social trading platforms and e-communities of traders.
A Generation of Investors
Previous generations of young people have rarely earned reputations for prudence - more often in the past, they have been seen as profligate with scant regard for establishment ideas such as investment.
The research shows this view needs to be re-examined, as 70% of the 501 individuals interviewed for the study admitted that their wealth had come from salary or wages, while 40% was through returns on investment products. Andrew Oldland QC, senior partner at Michelmores, said:
There are many stereotypes attached to millennials – whether it’s that they spend their money frivolously or that they are overly reliant on the Bank of Mum and Dad long into adulthood. Our research challenges these myths, revealing that a significant portion of this generation who have £25,000 or more have amassed these assets themselves.
Millennial Wealth Growth
While Michelmores' research shows that millennials are saving and investing their way to wealth, it remains highly likely that large amounts of money will be passed down to this generation from parents in the baby-boomer generation.
Research published in July by digital investment firm Grayscale suggested investment in traditional assets such as gold will decrease in the coming years as the younger generations build portfolios with more digital assets in them.
Barry Silbert, chief executive of the asset management firm, said that over the next couple of decades around $68 trillion of investment in the US alone will be passed down the younger generations. He added:
To the millennial generation gold is seen as the establishment: it's the banks, it's old people. Bitcoin is young and innovative: it's a disruptor. It's an investment in vision and entrepreneurship.
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