FCA investigates popularity of high-risk investments

A recent study has seen the Financial Conduct Authority (FCA) join forces with the London consultancy, known as BritainThinks, which specialises in strategy and insight, to understand the reason why high-risk investments are being selected now more than ever by self-directed investors.

According to the FCA’s findings, greater financial risks are being taken by younger investors, partly due to how new apps are making investing more easily accessible, and appear simple to novices.

The study showed that the majority of individuals making high-risk investments were under the age of 40, female and often taking investment tips from social media channels. Despite their urge to participate in riskier investments, 59% admitted that a substantial investments loss would fundamentally affect both their future and current lifestyle. This amounts to close to two thirds of these investors involved in high-risk investments being unable to afford a loss.

Regarding their reasons for high-risk investing, respondents commented that they enjoyed the excitement while other appreciated the status afforded those who possess stocks in certain companies. However, the FCA has expressed its concerns that without adequate advice, absolute beginners may be tempted into making high-risk investments that may be unsuited to their financial circumstances.

FCA executive director, Sheldon Mills, commented:

“Investors need to be mindful of their overall risk appetite, diversifying their investments and only investing money they can afford to lose in high-risk products.”

Those seeking investment advice in Shropshire and Cheshire and other parts of the country can rely on professional wealth management experts who can create well-balanced portfolios.


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