A major study by Vanguard has laid bare a generational shift in investing habits, revealing that more than two-thirds of UK savers who do not currently invest plan to start within the next two years. The figure jumps to over 90% among Generation Z and more than 80% among Millennials, according to the British Money Mindset 2026 report, which surveyed 2,000 UK adults.
The report highlights that Gen Z has accounted for nearly 780,000 new investors in the past two years, contributing a combined £25 billion. Crucially, one in three Gen Z investors chose cryptocurrency as their first investment — a far higher proportion than in older age groups. The Vanguard study warns that such a high risk appetite early on could expose younger investors to the extreme volatility of crypto assets, potentially leading to negative early experiences that 'discourage participation and reinforce misconceptions about investing'.
Discretionary fund manager Albemarle Street Partners (ASP) suggests the driving force behind this risk-taking is a deep-seated need for money to work harder, rooted in an early experience of high inflation. ASP managing director Charlie Parker noted that Gen Z has come of age during two major disruptions: the pandemic and the subsequent inflationary surge. 'They don't think the world is working in their favour,' Parker said, adding that for many, investing in cryptocurrency feels like a 'financial prayer for redemption' — a gamble that might deliver life-changing returns where gradual savings cannot.
The economic backdrop for younger investors is stark. According to Finder.com, the average age of a UK first-time buyer has risen from 30.3 in 2007 to 33.9, pushing home ownership further out of reach. This, combined with persistent above-target inflation in recent years, has eroded the purchasing power of cash savings. Behavioural economists argue that experiencing a significant bout of inflation during a formative period can permanently reshape attitudes towards saving, investing and risk. Parker drew a parallel with his own parents' generation, whose experience of the 1970s oil shock left them with a lifelong anxiety about energy costs.
For UK households and businesses, the trend carries significant implications. While the Bank of England has brought inflation down from its double-digit peak in 2022, the cost of living remains elevated, and interest rates — currently at 5.25% — have pushed mortgage payments higher for millions. The FTSE 100 has shown resilience this year, hovering around 8,200 points, but the shift of younger capital into unregulated crypto assets rather than traditional equities or bonds could dampen long-term returns for a generation already facing housing affordability challenges. Vanguard data also shows that 64% of Gen Z investors adjust their portfolios at least once a month, a level of activity that risks undermining the compounding returns that come from a long-term, disciplined approach.