- Analysis shows ISA rates down 46% over the past five years
- Millennials are more likely to place trust in new fintech platforms and digital services than other generations
- A quarter of 18-24 year olds would like to understand more about investment products to better invest in them
Savings rates for millions of UK savers have plummeted to dismal lows at a time when banks and building societies have traditionally lucrative deals to entice customers. With the average interest rate1 on Individual Savings Accounts (ISAs) down 46% over the last five years, the appeal of alternative finance and investment vehicles is growing – especially among younger generations.
New research2 from eToro reveals that those aged 18-24 are most likely to say they would like to understand more about investment products to better invest in them, compared with other age groups. One in four (25%) millennials say they would like to understand shares, commodities and currencies more before making investments compared with the average of 17%.
This appetite for greater knowledge about investments is also reflected in this generation’s interest in alternative investment platforms as millennials find refuge in the world of financial technology. The study found that half as many millennials place as much, if not more, trust in new fintech platforms than traditional providers compared with the national average (27% vs 17%). This trust in new financial services such as social trading, P2P lending and crowdfunding is most accentuated in London and Scotland, where one in four (25%) Londoners and one in five (22%) Scots express confidence in the potential of these new platforms.
Commenting on the findings, Yoni Assia, CEO of eToro, said: “Cash ISA savings are dinosaur products that time forgot. Low interest rates and changes to savings taxation are resulting in the worst ISA season on record. Comparatively, our data shows eToro traders in the UK gained an average return of 2.9% per position. With so many alternative options, there is no need to accept consistently abysmal rates on savings accounts.
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“The traditional financial system conditions people to be afraid of making their own decisions and that investing into the stock market is seen as risky behaviour. While investments can go up or down, studies have proved, time and again, that shares are one of the best long-term investments in the financial marketplace. They tend to outperform government bonds, corporate bonds, property and many other types of asset. When you take a longer view, you can see that stocks can add tremendous value.”
The new way to trade
Copy Trading, pioneered by eToro, has already transformed the way millions of people invest in capital markets. Individual investors are empowered to copy trades of more experienced traders and in turn allows those experienced investors to earn money from their copiers.
Yoni continues: “eToro enables traders to watch and learn from the investment decisions of popular investors, ask questions, and copy the trades of people who have a proven track record of success and an appetite for risk that matches theirs. Research has shown that copy trading is one of the most profitable investment decisions. Out of 124 million copied trades, 80% close in profit.”
Join over 4.5 million traders in the social trading revolution. Visit: www.etoro.com.