Younger investors are showing more willingness to dive into high-risk markets — even if it takes a toll on their mental health, survey shows

• Young people are taking on high-risk investments to compensate for rising inflation and the pandemic.
• That’s according to the Schroders Global Investor Study 2021 published Thursday.
• People are taking high risks despite a majority of them saying their portfolio’s performance affects their mental health.

Millennial and Gen Z investors are taking on risky bets in their portfolios — even to the detriment of their mental health.

That’s according to a new study titled “Schroders Global Investor Study 2021: Investors turn to riskier investments amid pandemic uncertainty,” which surveyed 23,000 people from 33 global locations.

“While many people feel compelled to take on greater risks to compensate for Covid uncertainty and concerns caused by rising inflation, this is even more so the case for younger investors,” the report said. 

The study found that nearly half, or 44%, of young people aged 18-37 are more willing to take on high-risk investments. That’s a jump from just 37% of people in general willing to do the same. 

Those young investors are looking for high returns — at least 10% — even if it hurts their mental stability.

In a zero or negative interest rate environment, more than half of those young people would take on high-risk investments to meet their return targets. That’s despite two-thirds of the age group “stating that the performance of their investments has an impact on their mental health,” the report said.

Risk should be approached “judiciously,” said Lesley-Ann Morgan, the head of multi-asset strategy at Schroders.

“Many people feel they now have to take on more risk in pursuit of returns given the current pandemic,” Morgan said. “The challenging economic conditions that we have seen over the past year have likely played a part in this. Amid the low interest rate environment, riskier investment choices have unsurprisingly become more compelling, especially for younger investors.”

These high-risk investors have an affinity for internet and tech stocks, too. The data show about two-thirds of the risk-takers invest in the sector, with real estate and cryptocurrencies coming in second and third place. But, the analysts noted, the 54% of people invested in precious metals like gold and silver “shows that their outlook is not necessarily bullish.”