More than 50% of young UK investors now trade crypto, raising concerns about risk-taking

• More than half of young UK investors trade cryptocurrencies, according to survey data from Charles Schwab UK.
• Meanwhile, just 25% invest in equities, raising concerns about high levels of risk-taking.
• Complex products such as contracts for difference are also more popular than shares, the survey found.

More than half of young UK investors are trading cryptocurrencies, with 70% viewing the digital assets as a good investment, according to survey data from Charles Schwab UK shared exclusively with Insider.

The jump in popularity of assets such as bitcoin and ether means investors aged 18 to 37 in the UK are far more likely to trade cryptocurrencies than shares, the survey said.

Just 25% of young UK investors held shares, with crypto and complex derivatives like contracts for difference (CFDs) more popular. The data did not break down the relative size of investors' holdings, however.

The online survey, which had 1,000 respondents, gives an insight into the amount of risk that young investors are taking on, Charles Schwab UK managing director Richard Flynn said.

"Cryptocurrencies seem to be the flavour of the month," he said. "It is important to remember that these are speculative assets that don't fit within traditional asset-allocation models."

He added: "While the prospective returns are tempting, investors should be aware that it is just as susceptible to supply and demand, but will not necessarily have the inherent value behind it."

The cryptocurrency boom has pulled in many big name investors but has been propelled by retail trading during the coronavirus pandemic.

Bitcoin has soared 670% over the last year to $55,400, attracting hoards of young investors who have found themselves with more time and spare cash during the crisis.

Charles Schwab's survey data showed that 51% of millennial and Gen Z investors trade in cryptocurrencies, up from 44% in May 2020. Only 8% of investors aged over 55 trade in crypto.

It also shed a light on the popularity of contracts for difference and spread betting among young UK investors, with 29% trading in the products.

CFDs, which are not allowed in the US, and spread betting both allow investors to take bets on financial assets without actually owning them. They often use large amounts of leverage and can cause big losses.

"If young investors are looking to adapt their strategies to protect against losses, a diversified portfolio, balanced across asset classes and sectors is a more sensible, time-tested approach," said Flynn.

Charles Schwab's online survey received 1,000 responses. Respondents were 18 or over and held at least one type of investment out of a list of assets including equities, bonds, certificates of deposit, ETFs and CFDs.