The rise in popularity for cryptocurrencies may have affected young people’s perceptions of investment risk, with many expecting higher investment returns than older generations, a new study has found.

Research from Aegon showed that across all age groups, respondents thought an annual investment return of just under 6% was reasonable. Among 18 to 34 year olds, however, this figure was notably higher with 19% expecting returns above 10%, including 7% who thought annual returns of 15% or more were reasonable.

People’s expectations about investment returns fell with age and just 6% of over-65s expected returns above 10%.

Aegon’s findings, based on a study among more than 1,000 UK adults in August, found that nearly half of younger people (47%) held alternative investments, including 22% who had invested in cryptocurrencies.

Returns on many cryptocurrencies have been dramatic but have also often been accompanied by significant volatility, with the FCA warning that anyone investing in this way must be prepared to lose all their money. Among age groups over the age of 35, Aegon found that no more than 20% of respondents held alternative investments.

The pension provider said its research suggests younger investors may have “unrealistic expectations” regarding mainstream investments and should go in with their eyes open to the possibility of extreme volatility, and potential total loss of savings when investing in high risk assets.

“Interest in cryptocurrencies has increased dramatically in recent years,” said Aegon pensions director, Steven Cameron. “However, for every individual who has made a profit, there are many who have lost money due to the frequent big swings, both up and down, which many of these assets have experienced.

“Our research suggests that younger people expect higher investment returns than older generations, and this may be a result of almost half of 18 to 34 year olds holding some kind of alternative investment. We’d strongly encourage people to take advice or at least do some careful homework before making any investment and consider how much risk they can afford to take on.

“The FCA’s warning that anyone investing in cryptocurrencies should be willing to lose all their money was stark and people need to differentiate money they can afford to lose from the money that will be the basis of their life savings.”

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