The Financial Conduct Authority (FCA) warns that young investors bear significant financial risks such as cryptocurrencies and foreign exchange.
According to regulatory research, there were younger, more diverse new consumer groups involved in risky investments. This may have been partially driven by the accessibility offered by the new investment app.
However, these high-risk products are not necessarily these consumers, as nearly two-thirds (59%) claim that significant investment losses will have a fundamental impact on their current or future lifestyles. There is evidence that it may not be suitable for your needs.
According to the survey, for many investors, emotions and feelings such as enjoying the thrill of investing, and social factors such as status resulting from the sense of ownership of the investing company were the main reasons for making an investment decision.
Thousands of investors have lost money after investing in Gamestop and gambling on the Football Index over the past few months.
Investors connected to social media aimed to underwrite hedge funds by investing in US game retailers Gamestop – But it proved a bumpy ride.
Meanwhile, thousands of football fans lost money after betting on the platform Football index It collapsed. The Football Index has positioned itself as a football “stock market”, selling players’ “stocks” and paying “dividends” for their performance.
Purchased by many other investors Cryptocurrency such as BitcoinDespite the lack of other savings and investment.
Sheldon Mills, FCA’s Executive Director of Consumers and Competition, said: However, some investors may be tempted to buy high-risk products that are very unlikely to be suitable for them, often through online advertising and high-pressure sales tactics. I am worried.
“This study helps consumers better understand what drives and motivates them, and can inform them about the risks associated with these investments through investment harm campaigns.”
According to FCA research, investors often have the knowledge to claim high confidence. However, it also shows a lack of awareness and belief in the risks of investment, with more than four in ten people, like most investments, at risk for their entire capital.
These young investors have the least financial resilience and may be more vulnerable to investment losses.
Susannah Streeter, Senior Investment and Market Analyst at Hargreaves Lansdown, said: I fully understand. A Financial Watchdog study reveals how a new type of young investor is involved in high-risk investments. This, which may have been persuaded by social media influencers, can have a serious impact on financial stability.
“What’s particularly warned in this study is that many investors investing in high-risk products invest in challenge, competition, and novelty factors rather than traditional reasons such as retirement savings. It’s like looking for the thrill of doing. “
James McManus, Nutmeg’s Chief Investment Officer, said: For those who are unlikely to be suitable.
“In fact, what we see in the meme stock story and the extreme volatility of crypto assets is a timely example of the dangers of a short-term approach to investing caused by hype. These moments are the noise of the market. Often that’s all, and if something sounds too good to be true, it should probably act as a clear warning that it is. “
Young people “choose high-risk investments”
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