Research from the Financial Conduct Authority (FCA) reveals that young investors often make quick decisions without thorough research, potentially leading to risky investments driven by hype.
Two-thirds (66%) of young investors spend less than 24 hours deciding on an investment, and one in seven (14%) finalise their decision in under an hour, according to research for the City regulator. Only one in nine (11%) take more than a week to decide if an investment is right for them, according to the survey of UK investors aged 18 to 40 for the Financial Conduct Authority (FCA).
Over half (51%) of investors had put in more money into something than they originally intended due to fear of missing out (FOMO) and this behaviour often results in riskier financial decisions being made, the regulator said. Despite 63% of people surveyed believing that hype meant something was a good investment opportunity, 40% said they had regretted investing in hyped investment products. The FCA is encouraging people to think more carefully before investing in high-risk or hyped products. Lucy Castledine, director of consumer investments at the FCA, said: “If you’re considering investing, the very first investment you should make is some of your own time. It’s important to look beyond the hype, especially on social media, and do your research to make sure what you’re investing in fits with your financial goals.” Dan Coatsworth, an investment analyst at AJ Bell, said: “Getting caught up in the hype can be a dangerous thing.”“Equally, piling into stocks and shares because they’re going up in value and everyone’s talking about them is a risky strategy, particularly if investors allocate more money than they can afford to lose or they buy after the price has already risen a lot.“Feelings of regret can reduce appetite for future investing and that could see individuals lose out if they don’t put away money for later in life.
INVESTING FINANCE HYPE FOMO RISK
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