Younger investors are driving a sharp rise in Stocks and Shares ISA use, as a new generation embraces low-cost, app-based investing and a more hands-off approach to building wealth.
Data from investment app Moneybox shows a 27 per cent increase in Stocks and Shares ISAs opened during the 2024/25 tax year compared with the previous year, alongside a huge 75 per cent jump in average deposits.
While the headline figures point to broad growth, it is younger age groups that stand out.
Around a fifth (21 per cent) of new accounts were opened by under-25s, rising to over a quarter (27 per cent) among those aged 25 to 30. By contrast, participation tails off steadily in older age brackets.
Vanguard says it already has around 225,000 clients aged 30 or under on its Personal Investor platform, underlining the scale of younger investors entering the market.
App-based investing and “set and forget”
The rise of app-based platforms like Moneybox points to a shift towards simpler, more hands-off investing among younger people, with features such as automatic deposits, round-ups and pre-built portfolios supporting regular contributions and making investing feel more accessible.
That aligns with a broader “set and forget” mindset. Rather than trying to pick individual stocks or time the market, many younger investors are opting for diversified funds that can be held over the long term with minimal intervention.
Brian Byrnes, head of personal finance at Moneybox, says the Stocks and Shares ISA is increasingly acting as an entry point for first-time investors.
“What’s particularly striking is the momentum we’re seeing in our own data, with young investors leading a cultural shift towards investing and taking greater control of their financial futures,” he says.
Where the money is going
The funds attracting the most attention reflect that preference for simplicity and diversification.
Among the most popular holdings on the platform are global index trackers and large, widely diversified funds, including the Fidelity Index World fund and the Vanguard S&P 500 ETF.
There is also some allocation to specialist areas such as global property and corporate bonds, with equities featuring heavily.
This is consistent with data from Vanguard, which says younger investors on its own platform tend to favour high-equity portfolios such as its FTSE Global All Cap fund and LifeStrategy 100 per cent equity fund.
James Norton, head of retirement and investments at Vanguard UK, says this reflects a key advantage younger investors have: time.
“Getting started early is really important,” he says. “Time is an asset and the longer you can be in the market, the better.
“Younger investors generally have more time to get to their goal. As a result, they can afford to focus more on maximising returns than preserving wealth. In practical terms that often means holding more equities.”
The US tilt - opportunity or risk?
One notable feature of many of these funds is their heavy exposure to the US market, particularly large technology companies.
Funds tracking the S&P 500 or global indices often have a significant weighting to the US simply because of its size and strong performance over recent decades.
That has worked well for investors so far. But it also raises questions about concentration risk, particularly after a prolonged period of US market outperformance.
Norton says this dominance is largely a reflection of market reality rather than an active bet by investors.
“Currently the US makes up a lot of the market because it has delivered extremely strong returns since 2000,” he says. “It may continue to do so.
“However, because nobody can see around corners, you are best off staying globally diversified and avoiding trying to pick winners and losers.”
In practice, that means that while US-focused ETFs can play a role in a portfolio, relying too heavily on a single market could leave investors exposed if performance shifts.
Global funds, which spread investments across regions and sectors, are often seen as a more balanced approach - particularly for those taking a long-term, hands-off strategy.
A lasting shift?
Rising participation, larger contributions and a clear investment style suggest this is more than a short-term trend. Government efforts to encourage retail investing, alongside industry initiatives to provide more guidance, could further accelerate adoption.
At the same time, the appeal of low-cost index funds and ETFs - with their transparency, diversification and ease of use - shows little sign of fading.
For younger investors, the best approach is to start early, invest regularly, and keep costs low.
Whether that strategy delivers the same returns in future as it has in the past remains to be seen. But for now, it is reshaping how a new generation approaches investing, and driving a significant shift in the ISA market.
When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.
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