Millennials tap into P2P investing
THE EARLY-ADOPTERS of peer-to-peer investing were typically older males living in the South East of England, looking to top up their pension pots with high-yielding P2P loans.
But as the industry has evolved, so has its customers. Younger people are increasingly becoming involved in the sector, attracted by a slick digital experience and competitive returns.
“There is clear trend that the number of investors under the age of 35 is growing strongly and consistently over time,” said a spokesperson from ‘big three’ P2P platform RateSetter.
Read more: Millennials are embracing digital investing
“Similarly, the proportion of invested funds that come from people under 35 is also growing strongly.”
Business lender Growth Street has also reported popularity among younger investors. Chief executive and founder Greg Carter said that around 30 per cent of the platform’s investors are under 39 years old.
“They have slightly smaller investment balances, which typically grow with age,” Carter said.
“If we can maintain loyalty they will grow their balances over time.”
An easy-to-use investor proposition and good communication is key, Carter said, with Growth Street customers able to contact the team via its popular live chat function as well as the usual methods.
“I think young people are curious about different methods of investing,” Carter added.
Meanwhile, The House Crowd founder Frazer Fearnhead is launching a millennials-focused brand called Money Mog, which will enable less well-off, younger customers to invest as little as £50 a month.
“Millennials have a natural antipathy towards traditional institutions, but apps like Moneybox have shown that there is a market for that younger audience,” he told Peer2Peer Finance News.
Read more: Millennials more likely to invest in SMEs
“P2P investing may appeal to younger people who want to explore the potential in a relatively new approach,” said Sarah Coles, personal finance analyst at Hargreaves Lansdown.
“However, they need to appreciate that the immaturity of this market means it hasn’t been tested by the full market cycle.
“It may make sense as a small part of a large and diverse portfolio for an experienced investor, but you need to understand all the risks involved and be completely comfortable with them.”
Read more: Zopa: Brits hit financial maturity at 31
This article first appeared in the print version of Peer2Peer Finance News, which can be read in full here.
