The generational divide in investment & ESG interest is growing

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CMC Invest’s investor survey uncovers some surprising behaviour from investor attitudes during the cost of living crisis. The study contrasts Gen Z and Millennials with older generations, focusing on investment priorities, ESG concerns, and the allure of tax-free investing.

Generational Investing Attitudes Survey

  • The survey canvassed a large group of investors across a range of ages
  • Each respondent had been investing for several years and had at least a five-figure portfolio
  • CMC Invest asked the survey pool about why they invested, their goals, the products they used and their investment processes

The survey findings shed light on what divides, and unites, older and younger cohorts of investors.

How the economy is affecting their investing behaviour, what the investors prioritise, and whether factors such as ESG credentials or tax-free investing are important to the different demographics.

CMC Invest asked researchers Censuswide to survey more than 2000 investors, each with £10,000 or more of investable assets, who had been investing for at least two years. And the findings make for interesting reading.

Crisis! What Crisis?

For example, two-thirds of those surveyed had continued to invest as normal during 2023, despite the cost of living crisis, and another 30% said that they were investing more regardless of rising prices and interest rates.

However, the latter might also be an incentive to put money to work as cash deposits and bond yields have become attractive once more.

The younger cohorts of Gen Z and Millenials are most likely to be investing more money this year, with 58% and 47% of these demographics, respectively, saying that they had invested more money in 2023.

Retirement goals drive investing – but not for everyone

Some 58% of the investors surveyed said that building up a comfortable pension was a reason behind their investment activity.

However, the younger generations of investors put financial independence ahead of retirement, 22% of the Gen Z investors and 18% of the Millenials said that financial freedom was their top priority, compared to the 10% and 14% who put retirement top of their list.

ESG is another source of division

ESG investing was also a source of differences between the generations, 79% of the GenZ investors said that they consider or look at an investment’s ESG credentials before putting their money into it.

However, those investors over 43 years old (that’s Generation X, the baby boomers and the silent generation) admitted that they often overlooked ESG factors,  79% of the silent generation,  investors who are 77 years old, or over, said they didnt look at ESG criteria at all.

Priorities vary here, older generations particularly those in retirement or heading towards the end of life are less concerned about ESG issues and more interested in the returns their investments generate.

Whilst younger generations, with a lot more of their life ahead of them, are more concerned about equitable investing, the environment and sustainability.

Overall, just over half the survey respondents (53.0%) said they did look at ESG credentials.

ESG investing has become something of a marmite subject with concerns about greenwashing, definitions of sustainability and companies saying one thing whilst doing another.

For example, water companies that pay high dividends to shareholders, rather than investing in their networks. whilst dumping untreated sewage into rivers and seas.

No argument about tax-free investing

Tax-free investing wrappers are popular across all generations, however, and 52% of the investors utilise a Stocks and Shares ISA and another 49% invest in a Cash ISA.

Surveys such as this are always interesting because we can get a feel for what investors are doing, what matters to them most and the products that they utilise.

That’s useful intelligence for fellow investors, the management of platforms such as CMC Invest and those of us here at the Good Money Guide.

As we have said before it would be even more illuminating still if we could see whether the investor’s activity matched up to their intentions.

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