The UK Financial Conduct Authority (FCA) today published key findings from a survey that polled 2,000 UK investors aged 18 to 40.
The research reveals that young investors are making important investment decisions in a matter of hours, rather than taking the time to check out whether the product is right for them in the long-term.
The survey found that two-thirds (66%) make investment decisions in less than a day, with one-in-seven (14%) deciding to purchase in under 60 minutes. Only 11% take more than a week to decide if an investment is right for them.
Investing for the long-term can be rewarding, and not just financially. However, while buying into the buzz can sometimes deliver short-term satisfaction, it can also lead to regret. Despite 63% of people believing that hype meant it was a good investment opportunity, 40% regretted investing in hyped investment products.
The research reveals strong parallels between impulse-driven investment decisions and purchases of everyday viral products. When asked more generally about any viral items they had purchased within the last year, crypto was fourth in the list (27%), just behind air fryers (42%), which topped the list, followed by smart watches (32%) and energy drinks (32%).
Over three quarters (76%) admitted they would likely buy an everyday viral consumer product based on online hype, and nearly two-thirds (65%) acknowledged they had the same attitude to investment decisions.
Reasons for investing in hyped products are similar to those for consumer purchases: missing out on a good opportunity (32%), driven by the desire to feel good in the moment (26%), and wanting to keep up with trends (23%).
‘Fear of Missing Out’ (FOMO) also plays a major role. Over half (51%) of young investors (18-40) put in more money than they originally intended due to FOMO and this behaviour often results in riskier financial decisions being made.
Social media platforms are influential: 85% of young investors acknowledged platforms such as Instagram, TikTok, and YouTube are highly influential in their investment decisions, with 43% using these platforms as their primary research tool.
The FCA is calling on investors to think more carefully before investing in high risk or hyped products, by thinking about their long-term financial goals.
The research was conducted by Censuswide and gathered in August 2024.
