Social media and the younger investor

26th August 2021

The Financial Conduct Authority (FCA) is concerned about the influence social media is having on younger investors, who it believes are taking on significant financial risks.

This younger, more diverse group of investors, it said, is highly reliant on social media platforms such as YouTube, Instagram and TikTok for investment tips and advice, but lacks the knowledge and understanding required to make informed choices.

High confidence, low resilience

The FCA expressed concerns that these investors are putting their money into riskier products, despite a ‘striking’ lack of awareness of the hazards associated with investing. Shockingly, 45% did not associate ‘losing some money’ as a potential risk.

They also showed low levels of financial resilience, with research showing that a significant loss could have a fundamental impact on the lifestyles of 59% of inexperienced investors.

Ask yourself five questions

A ‘digital disruption’ campaign has been launched by the FCA to make investors aware of the risks, by encouraging them to ask five questions:

  1. Am I comfortable with the level of risk?
  2. Do I fully understand the investment being offered to me?
  3. Am I protected if things go wrong?
  4. Are my investments regulated?
  5. Should I get financial advice?

Don’t risk jeopardising your financial future

We can help develop an investment plan suited to your long-term goals and risk profile.

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.