The Financial Consequences of Low Savings and Investment Habits Among Younger Generations

Invessed has reported that the economic impact of low savings and investment habits among younger generations threatens future growth and stability. A recent survey by Invessed and YouGov highlights a significant financial literacy and engagement gap, raising concerns for policymakers and the investment management industry.

"Financial investment has become an unaffordable luxury," says Marianna, a 32-year-old project manager from Kent, highlighting the struggle to save for the future amid the challenges of buying a house and managing student loans.

Marianna, a 32-year-old project manager from Kent, encapsulates the plight of her generation. "Financial investment has become an unaffordable luxury," she says, emphasising the struggle to save for the future amid the challenges of buying a house and managing student loans.

The survey's findings reveal that only 48% of GenX, Millennials, and Gen Z feel comfortable with basic investment principles. There is a notable gender gap—37% of women versus 61% of men. This disparity underscores the pressing need for targeted financial education.

Invessed's CEO, Theo Paraskevopoulos, asserts that government support, while crucial, is not the sole solution. "To engage this demographic effectively, Wealth managers must simplify their language, build financial literacy, and illustrate long-term benefits," he says.

Alarmingly, nearly half of younger generations save nothing or invest less than 5% of their monthly income. This lack of savings jeopardises their financial security and has broader economic implications, including increased reliance on social safety nets and reduced consumer spending.

Moreover, the survey highlights a troubling lack of engagement in investment monitoring, with only 61% of young investors actively tracking their investments. The gender divide is stark, with 72% of women versus 50% of men not monitoring their portfolios.

The sentiment towards the long-term financial future is equally grim, with 51% of younger generations feeling little or no control over their finances. This pervasive anxiety calls for greater financial education and planning support.

Paraskevopoulos notes that 56% of younger generations are unlikely to seek professional investment advice in the next five years, primarily due to high fees and a preference for independent management. He urges wealth managers to adapt by offering digital-first client apps and financial literacy tools.

The government, too, can help bridge the financial literacy gap and promote a more secure future for younger generations through policy and incentives. The report concludes that addressing these issues is crucial for fostering a stable and prosperous economy.

Invessed conducted a client engagement survey in partnership with YouGov Plc. All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 2,068 adults.