According to an FCA study, “the thrill of investing” and “status based on a sense of ownership” are encouraging young people to invest in cryptocurrency and forex markets.
The UK Financial Conduct Authority (FCA) released research this week to better understand the portrait of investors who are involved in high-risk investments such as cryptocurrencies and forex markets.
According to the FCA, a younger and more diverse consumer group is inclined towards high-risk investments. However, these products do not always meet their needs – 59% of respondents say a significant loss of investment will have a fundamental impact on their current or future lifestyles.
“The study found that for many investors, emotions and feelings, such as the pleasure of investing, as well as social factors – status resulting from a sense of ownership in the companies in which they invest, were key reasons for making investment decisions.”
FCA notes that for many investors, challenge, competition and novelty are more important than the usual, more functional reasons to invest, such as making their money work. 38% of those surveyed did not indicate a single functional reason for investing.
The researchers also found that this new group of investors differs from traditional investors in age and background. According to the FCA, “most often they are women under 40 years old, representatives of ethnic minorities.”
These investors also rely more on YouTube and social media platforms for investment information and are likely to use widely available investment applications.
The FCA also found that four out of ten people surveyed do not see “losing money” as an investment risk, while 78% say they rely on “intuition and rules of thumb” when making buying and selling decisions.
Recall that in January, the UK regulator warned consumers about the risks of investing in crypto assets and the likelihood of losing all invested money. In addition, last fall, the FCA decided to ban cryptocurrency derivatives, despite the disagreement of 97% of those surveyed.
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