New research from the U.K. Financial Conduct Authority (FCA) suggests the "thrill of investing" and "status from a sense of ownership" are driving more younger people to engage in "higher-risk" investments like cryptocurrency and foreign exchange (forex).
- The financial watchdog published its findings Tuesday, suggesting that those doing so come from a more diverse background than traditional investors.
- "They tend to skew more towards being female, under 40 and from a BAME background," the FCA said, referring to Black, Asian and minority ethnic, a U.K. demographic.
- They are also more reliant on YouTube and social media platforms for investment information and are likely to be using widely available investment apps.
- The research showed that some 59% of those investing in products like crypto admitted they may not have the means to withstand a significant financial loss.
- The FCA also found that over four in 10 do not view "losing some money" as a risk of investing, while 78% claim to rely on "gut instinct and rules of thumb" to know when to buy and sell.
- "The challenge, competition and novelty are more important than conventional, more functional reasons for investing like wanting to make their money work harder or save for their retirement," the FCA concluded.
- The regulator previously tried to tackle investment risk to retail customers by banning the sale of crypto derivatives in January.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.