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FCA finds that new investors have a high degree of self confidence and claimed knowledge : UKInvesting

For those who haven’t read it, the FCA has published research into the sudden, and recent, rise of self directed investors. With the following interesting points:

18% of new investors over the last 3 years are aged 18-24 driven massively by the popularity of apps such as Freetrade and Trading212. This represents a 3x increase on previously research.

Those individuals who were investing in volatile high-risk products had a high degree of self confidence and claimed knowledge but found actually this was misplaced.

  • Investment decisions were placed on gut instinct

  • Predominately choosing ‘hyped’ investments or using big name brands as ‘safe’ investments like tech companies

  • Motivated mainly through making money quickly and the novelty of the apps

Investors with less than 3 years experience use ‘alternative’ sources of information getting their investment research from:

Only 41% of new investors believed that losing money they invest was a genuine risk with quotes such as

  • If you don’t take risks, you won’t get the hard gain

  • investing for about 18 months in FX as it was the most lucrative and easily accessible. Shortly after went into crypto

59% claim that a significant investment loss would have a fundamental impact on their lifestyle with many stating they would dip in and out of their investments when short on cash

The quote that really stood out to me as the definition of this newest generation of ‘investors’

“I started looking at investment w2bsites like Vanguard, but felt completely out of my depth. Apps like Trading212 are really easy to use and the accessibility really catered to me”

“Trading was something new I could put my mind to. My flatmate got me into it and I was it as an interesting way to pass some time”

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