Investors and social media
The Financial Conduct Authority (FCA) is concerned about how much influence social media could be having on younger investors, who could unknowingly be taking on significant financial risks.
According to the FCA, this younger, more diverse group of investors is highly reliant on social media platforms such as Instagram, YouTube, and TikTok for investment tips and advice, but they tend to lack the knowledge and understanding required to make informed choices.
A mismatch of confidence and resilience
The FCA expressed concerns that these investors are confidently investing in riskier products despite a ‘striking’ lack of awareness of any associated risk. Shockingly, 45% did not associate ‘losing some money’ as a potential risk.
This group also shows low levels of financial resilience, with the findings showing that a significant loss could have a fundamental impact on the lifestyles of 59% of inexperienced investors.
Five questions to ask yourself
A digital disruption campaign has been launched by the FCA to raise awareness of the risks, prompting people to ask themselves five questions:
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