A sizable majority of young investors seeking high-risk opportunities are motivated by competition and hype, a new survey has indicated. They often turn to cryptocurrency and forex products, according to the poll conducted by the U.K.’s financial regulator.
FCA Launches ‘Investsmart’ Campaign Targeting Risk Prone Investors
The U.K.’s Financial Conduct Authority (FCA) has carried out new research into the attitudes of young investors towards high-risk products. The watchdog has surveyed 1,000 respondents, aged between 18 and 40, as it launches a 5-year campaign to reach out to inexperienced investors that could cost the British taxpayer £11 million ($15 million).
Through the poll, the regulator has been able to establish that many of these investors are driven by competition with friends and family members when investing in cryptocurrency and forex. Three-quarters of the surveyed, 76%, said they felt a sense of competitiveness while two-thirds, or 68%, likened the experience to gambling.
At the same time, only a fifth of all respondents, 21%, were considering holding their most recent investment for more than a year and just 8% were expecting to keep the assets for at least five years. That’s despite a prevailing preference (60% of the polled) for long-term investments providing more stable, albeit lower, returns.
Hype in the news and on social media has been another driving force for new investors looking into acquiring high-risk products. Well over half of the participants in the study, 58%, said they felt encouraged to put funds into investments they were constantly hearing about in the news coverage, through social media channels, and from other people.
FCA’s new research also shows that most of the young investors who bought cryptocurrencies, a staggering 69%, believed these were regulated by the FCA and another 57% thought the same is valid for the forex products they purchased. The financial watchdog has concluded that these people were unable to understand the lack of adequate protection for them and their money.