New investors are upending norms: They are excited about cryptocurrency, are using mobile investing platforms to buy and sell, and are even turning to social media for advice about investing, according to a new survey from CNBC and Momentive.
Of the more than 5,500 people surveyed, 45% are investors. And about a quarter of those investors got started in 2020 or later.
Investors ages 18 to 34 are more than twice as likely as more experienced investors to own cryptocurrencies (26% versus 12%), the survey found. They are also almost twice as likely to use social media to research investment ideas when compared to the general population (35% versus 18%), and to use self-service mobile apps as their main way to manage investments (57% versus 31%).
Many younger investors think that crypto will give them great returns. When asked how they would invest a gift of $1,000 to see the largest return over the next year, 21% of 18- to 34-year-olds said they'd put it in bitcoin. That's a larger share than picked any other kind of investment.
Among crypto investors of all ages, 44% are attracted by its potential for high growth in a short amount of time, and 60% of them also see potential for long-term growth.
Cryptocurrencies have had a wild ride over the past year, however. Bitcoin, the world's largest cryptocurrency, hit a record high of more than $63,000 in early April, before plunging in May to near $30,000. Its value topped $50,000 a coin Monday, which is a three-month high and more than triple its value from a year ago.
"Before anyone chooses to invest in crypto, they should understand exactly what they are investing in and why they are doing so and then understand its risk," Simon Tryzna, chief investment officer at ClearPath Capital Partners in San Francisco, recently told Grow.
Don't put in more than you can afford to lose. Financial advisors recommend using just 5% to 10% of your portfolio for investments of interest, like crypto or individual stocks, while putting the rest in something less risky that tracks a broader swath of the market, such as index funds and ETFs.
"Invest in funds you won't need for at least a decade," Erika Safran, a CFP and principal at Safran Wealth Advisors, told Grow earlier this year. "Why? You will either be very rich, or you won't be despondent about your losses."
More from Grow: