Younger investors are far more positive about the Chancellor’s recent Budget than their older counterparts and are more likely to invest in the UK as a result, according to Charles Stanley Direct.
Its research found more than half (57%) of DIY investors in the UK are positive about the Autumn Budget, driven predominantly by young investors.
Over three quarters (78%) of Gen Z said they feel positive or very positive, while 68% of millennials said the same. However, this figure falls to 37% among Gen X and just 28% among Baby Boomers.
The main reason people are positive is because they believe the announcements made by Chancellor John Healey will benefit their business and/or professional finances (42%) or personal finances (37%).
Charles Stanley Direct said personal wealth is especially true of Gen Z investors, with 43% of those positive about the Budget feeling they’ll be better off, compared to 24% of Gen X.
The benefit to professional and business wealth is driven by those aged 25-34, with more than half (52%) of this cohort stating they think they’ll be better off, as well as 45% of those aged 45-54.
Meanwhile, the research found the main reasons for negativity are a belief that the announcements will not help the economy grow (52%) or they will be worse off financially as a result of what was announced (48%).
Rob Morgan, chief investment analyst at Charles Stanley Direct, said: “The handful of rabbits Healey pulled from his hat were predominantly aimed at appealing to younger voters. Between increasing the side-hustle tax free allowance, an ISA specifically designed for first time buyers, and the UK’s first ever starter ISA, it’s understandable that Gen Z and younger millennials will feel buoyed by the Budget.
“Meanwhile, the extra tax on property and savings income is going to increase the burden for the wealthy – who are typically older. And measures specifically designed to support older populations – the pension allowance, and the U-turn on lower cash ISA allowance – are more marginal.
“What’s more, older investors are likely to be a bit long in the tooth and will have been burnt by the highs and lows of previous Budgets.”
The research also found that a quarter of investors (26%) are now more likely to invest in the UK as a direct result of the Budget, driven primarily by millennials (34%) and Gen Z (31%). However, 15% of all investors say they will invest less in the UK.
Separately, more people plan to open a cash ISA as a result of the Budget (14%) than a stocks and shares ISA (10%), while 19% of investors plan to increase their pension contributions and just 3% plan to decrease them.
Morgan added: ”The renewed appetite to invest more into the UK is an unexpected boon – driven almost entirely by younger generations who are more likely to change their investment decisions as a result of the Budget.
“While the government’s growth plan did little to inspire confidence, younger investors appear to be looking past the headlines and recognising that UK markets are already offering decent value. By adopting this pragmatic approach, they are taking advantage of the current market value to build their portfolios for the long term.”
While using AI was the most common action to help people understand what the most suitable next step for them is, with 49% of Gen Z and 46% of millennials planning to use AI, the research also highlighted the need for professional advice. Nearly half (49%) of people with a financial adviser will speak to them about their next steps and 14% of those who have never used an adviser plan to engage one to discuss what has been announced.
Main image: nick-page-tWpv57Ip-3c-unsplash
