Almost half of young UK investors say their first investment was in cryptocurrencies, although a large proportion of them are using debt to fuel their purchases, according to research on Wednesday from investment platform Interactive Investor.
45% of 18-29 year olds said their first investment was in crypto, according to the survey. Millennials are some of the most avid investors in crypto as they believe it yields better returns than the traditional asset classes their parents and grandparents have favored.
Bitcoin was by far the most popular cryptocurrency, with one-fifth saying they had purchased stakes in the most widely traded cryptocurrency, according to the Interactive Investor report.
More than half of those who had invested in bitcoin, or meme currency dogecoin, said they had taken on debt to do so. According to the survey, 23% of bitcoin investors used their credit cards to fund their purchases, while 17% used student loans and 16% used a different type of loan.
“Young adults using credit cards, student loans and other forms of debt to invest is a worrying trend.” Myron Jobson, a personal finance campaigner at Interactive Investor, said, adding that this could damage young people’s credit scores and therefore cause financial obstacles later in life.
Over a longer term horizon, crypto still stacks up favorably. Over a 10-year period, 20% of 18-29 year olds said they preferred to store their savings in the form of cash, with crypto coming in second place at 16% and shares placing third with 14%.
“None of us know what the future holds for cryptocurrency. But we do know that traditional assets have been serving investors for decades, they are far easier to understand, and they spread your risk.” he said.