Are young people investing or gambling?

Danni Hewson
23 March 2021

New research published today from the FCA shows:

•    A new, younger, more diverse group of consumers are getting involved in higher risk investments 
•    Over 4 in 10 don’t view ‘losing some money’ as one of the risks of investing, even though their whole capital is likely to be at risk
•    These investors also have a strong reliance on gut instinct and rules of thumb, with almost four in five (78%) agreeing “I trust my instincts to tell me when it’s time to buy and to sell” and 78% also agreeing “There are certain investment types, sectors or companies I consider a ‘safe bet’”
•    Younger investors will less experience may have the lowest levels of financial resilience with 59% saying a significant loss could have a fundamental lifestyle impact 

Danni Hewson, financial analyst at AJ Bell, comments

“It might feel like a game but the figures on screen are real.  Real money, real risk.  And when it all goes wrong, which any seasoned investor knows it can, the end result can be shattering. 

“Although based on a relatively small sample, much of which was focused on higher risk investments, the FCA is right to highlight these dangers.  Playing the markets is one thing – playing at it is entirely different.  That’s not say all young investors are ignorant, far from it; but a worryingly large number seem to be blind to the pitfalls. Worse, almost half think there is no danger.  

“The research suggests many are often relying on gut instinct or advice gleaned from social media rather than established sources of information with rigorous checks and balances.  And the high, when it comes, can override everything, clearing the way for unscrupulous scammers to pray on their vulnerabilities.  

“No one likes to lose money, but if that loss is going to have a fundamental impact on your life choices you need to ask why you are putting it on the line in the first place.  First and foremost, investments are about security.  Risk will always be there, but it should be calculated, not ignored.”

Danni Hewson
Financial Analyst

Danni spent more than 19 years at the BBC, presenting and reporting on business news across a variety of programmes – including BBC Breakfast, BBC News Channel, BBC Look North and latterly Radio 5 Live’s flagship business programme ‘Wake up to Money’. She is now responsible for producing analysis and commentary across a broad range of subjects at AJ Bell, from financial markets, to economics and personal finance.

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