The major US financial group Charles Schwab conducted a study and found that young UK investors are twice as likely to buy cryptocurrencies such as bitcoin than stocks. The company says it is closely following developments in the crypto space, but needs more clarity from regulators before considering offering crypto services directly to customers.
Cryptographic research by Charles Schwab
U.S. financial group Charles Schwab, which has about 31.9 million active securities accounts, released the results of its investment survey last week, Reuters reported.
The survey, conducted between February and March, received 1,000 responses. Respondents were UK investors over the age of 18 who owned at least one type of investment from a list of assets including stocks, bonds, certificates of deposit (CDs), exchange traded funds (ETFs) and contracts for difference (CFDs).
Charles Schwab found that 51% of investors aged 18-37 and Generation Z trade or own cryptocurrencies, up from 44% last May. Moreover, 70% believe that cryptocurrencies are a good investment. At the same time, only 8% of investors over the age of 55 have traded in cryptocurrencies. By comparison, 25% of young investors have bought or owned stocks.
Press release from Charles Schwab detailing the investigation:
With more and more young people buying speculative products, there are concerns that these investors are not diversifying their portfolios enough to mitigate risk if cryptocurrency markets fall.
The survey results also showed that seven out of ten young investors do not know how to protect themselves against losses in the current financial climate.
Richard Flynn, managing director of Charles Schwab (UK), told Business Insider that the study provides insight into the level of risk young investors face. He said: Cryptocurrencies seem to be the craze of the month. It is important to remember that these are speculative investments that do not fit traditional asset allocation models.
Flynn then warned: While the potential returns are attractive, investors should be aware that they are also dependent on supply and demand and do not necessarily have an intrinsic value.
Last week, Charles Schwab CEO Walt Bettinger spoke about cryptocurrencies in his speech. He said his company is closely and cautiously studying the cryptocurrency market and is waiting for more guidance from regulators on digital currencies before it considers offering crypto features on its platform.
He stressed that it will be important to get more clarity from regulators before considering a retail offering of cryptocurrencies:
We are following this closely. We know very well what’s going on. We would like the regulations to be clearer. If and when that happens, expect Schwab to become a player in this space, just as it has been in other investment opportunities across the spectrum.
What do you think of this Charles Schwab survey and do you think the company should offer cryptocurrency services? Let us know your comments in the section below.
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