Are crypto, NFTs, and DAOs changing the demographics of investing?

TECHNOLOGY

Are crypto, NFTs, and DAOs changing the demographics of investing?

Here’s what our research shows about the demographics of investing, including who’s shaping the future of digital assets.

Abigail Matsumoto

April 1, 2022 | 6 min read

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Look around at the digital asset landscape and you’ll see that 2022 has been a wild ride—and the year is still young. 

Brands are building non-fungible tokens (NFTs) into their marketing strategies. The first executive order on cryptocurrencies has been signed. And decentralized autonomous organizations (DAOs) are playing a complicated role in Ukraine and Russia. But beyond the highs, lows, and recent headlines, Momentive Research has uncovered some interesting insights on investing demographics that can help shed light on the future of digital assets.

For many, investing is a way to grow wealth and pursue financial independence, but the truth is, not everyone has a 401(k) or knows how to hire a broker. Some believe that nontraditional investment options and investment management tools have the potential to fill that vacuum and, our data shows, may open more doors for young people and people of color. 

These groups believe the internet expands access to wealth and makes it easier for the average person to prosper. In fact, a majority of Hispanic (65%), Black (65%), and Asian (64%) adults, as well as Gen Z (65%), think everyone has an equal chance to succeed and thrive on the internet today—significant, given a minority of Boomers (44%) and white adults (45%) see it that way¹.

Curious to learn more about changing investor demographics and what that means for financial markets? Let’s look at the data.

54% of Black investors and 53% of Hispanic investors began investing in the last 3 years

Young people and people of color are demographic factors that correlate strongly; in 2019, the Pew Research Center found that racial and ethnic minority groups in the U.S. skew younger, while non-Hispanic whites are disproportionately older. When considered alongside factors like young people having lower household incomes, people of color having less generational wealth, and both having student debt², it may not come as a surprise that these groups are less likely to have investments.

Only 32% of Gen Z and (41%) Millennial adults report having any investments in stocks, bonds, exchange-traded funds (ETFs), or crypto, compared to 59% of Boomers. Hispanic (31%), Black (33%), and Asian (49%) adults are also less likely to have investments than white adults (55%)³.

However, young people and people of color who have invested in stocks, bonds, ETFs, or crypto are more likely to be new investors—and we can glean important insights from this rising wave of investors. 

Notably, 53% of Hispanic investors, 54% of Black investors, and 45% of Asian investors made their first investment in the last 3 years, versus 21% of white investors³. And a full 73% of Gen Z investors began investing in the last 3 years. As new investors get younger and more diverse, the future of financial services will likely be influenced by their beliefs, investing habits, and preferences. Savvy finserv leaders will keep up by keeping this in mind.

73% of Gen Z investors began investing in the last three years.

Younger investors embrace mobile apps and digital assets

So how are younger investors shaping investment trends? For one thing, they’re driving the adoption of nontraditional investments like cryptocurrencies, DAOs (organizations based on blockchain technology that make investment decisions as a collective) and NFTs (digital assets that exist on a blockchain and represent real-world items like artwork or music). 

Younger adults are more likely than older adults to believe DAOs aren’t just hype and that they have the potential to improve the way companies and organizations are run1. They're also more likely to view crypto and NFTs as legitimate growth investments—and they act on that belief. Nearly half (47%) of Millennial investors and 35% of Gen Z investors own crypto, compared to just 9% of Boomers³. Put another way, two-thirds of all crypto investors are under the age of 45. 

And these investors aren’t just open to nontraditional investments, they’re also replacing traditional financial advisors with self-serve investment tools. Very few young investors rely on a broker or agent to make their trades. Instead, they prefer using mobile apps like Robinhood and Coinbase to manage their portfolios. In fact, an overwhelming 69% of Gen Z investors primarily use a self-service mobile app for their investments—and 62% believe robo-advisors do a better job at managing portfolios than human financial advisors.

Women are less familiar with NFTs and 11% less likely to trade crypto

Our research shows that female investors are more likely to stick to more conventional investment methods and products than men. For example, most female investors (52%) have a broker execute their trades, versus 41% of men³. Women also own established investment products like mutual funds, bonds, and real estate at similar rates to men, but not newer products like ETFs.

And in the new frontier of crypto and NFT marketplaces, women have much lower participation rates than men. Just 18% of female investors trade crypto, which is a significantly smaller percentage than the 29% of male investors who do³. Also, fewer women than men say they’re familiar with NFTs (24% vs. 42%), and just 6% of women have traded an NFT, compared to 11% of men1.

Just 18% of female investors trade crypto, compared to 29% of male investors.

Men are also driving NFT purchases within their generational cohorts: 20% of Gen Z men and 19% of Millennial men have purchased an NFT, compared to 12% of Gen Z women and 11% of Millennial women.

However, there are some signs that younger women are leveling the DAO playing field. While female Millennials are much less likely to know about DAOs than their male counterparts (16% vs. 27%), both male and female Gen Zers are equally likely to have heard of them (21%)1. This statistic may be the start of more female participation in blockchain in the future, but time will tell whether the next generation of investors will spark more equal gender representation in this corner of the digital asset world.

Young people and people of color are more optimistic about their investments

In October, 2021, we found that adults of all ages expected the stock market to decline in the next 6 months—but young people and people of color showed a more positive outlook toward the economy and their investment opportunities. They said they were prepared to “buy the dip” and increase their market participation, despite any market uncertainties.

More than half of Gen Z (58%) and Millennial (56%) investors were planning to add to their investment portfolios, versus 28% of Boomers. A majority of Gen Z and Millennials also viewed crypto as an appealing investment, even saying it could serve as a hedge against traditional asset crashes. In contrast, 39% of Boomers were lukewarm about the investment landscape, saying nothing on the market seemed like an appealing investment2.

Among people of color, more Hispanic (54%), Black (54%), and Asian (43%) investors than white (36%) investors said they planned to invest in the next 6 months. Once again, crypto was the investment of choice for 46% of Black investors, 44% of Hispanic investors, and 40% of Asian investors, compared to 24% of white investors2.

Between volatile cryptocurrencies and emerging investment technologies, the investing landscape changes every day. But tuning in to demographic shifts—and keeping an eye on the next generation of investors—can help leaders keep up and think ahead.

1Methodology: This Momentive study was conducted 1/5/2022—1/6/2022 among a national sample of 3,052 adults. Data were weighted for age, race, sex, education, and geography using the Census Bureau’s American Community Survey to reflect the demographic composition of the United States.

²Methodology: This Momentive study was conducted 1/10/22-1/13/22 among a national sample of 5,162 adults. Data were weighted for age, race, sex, education, and geography using the Census Bureau’s American Community Survey to reflect the demographic composition of the United States.

³Methodology: This Momentive study was conducted 10/22/2021—10/26/2021 among a national sample of 5,441 adults. Data were weighted for age, race, sex, education, and geography using the Census Bureau’s American Community Survey to reflect the demographic composition of the United States.

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