Quilter Cheviot comments as FCA research exposes dangerous risks for young investors

by | May 24, 2023

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Following the latest FCA research on young people and their investing habits, Vanessa Eve, investment manager at Quilter Cheviot, comments:

“While many don’t necessarily associate investing and dating together, they clearly share a lot of similarities for young people, as evidenced by the FCA’s latest data. The advance of technology and the fact everything is now just a touch of a button away means we interact with our love life in a very similar way to our investments.

“What is quite stark from this data is the fact that only two percent of young investors have a time horizon of more than five years when investing, while 14% have none at all. Simply put, investing is for the long-term and is not a get rich quick scheme. The returns can be genuinely life changing if someone is willing to sit it out for a minimum of five years, but ideally far longer in order to see the true effects of compounding.


“Furthermore, the FCA found that less than a third of investors had any specific long-term goal in mind when investing, with just 31% of people investing to earn more money than they would in a savings account. While rates on savings accounts have risen of late as the Bank of England has hiked interest rates, they still massively lag the rate of inflation and are producing real losses as prices rise at a faster rate. This is why it is so important to have a long-term plan and stick to it, tweaking around the edges as your circumstances evolve. For young people, who have time on their side, investing provides the greatest potential to beat inflation over the long-term.

“The research also highlights once again the pitfalls of social media, and it is clear that this isn’t only a risk in the dating game. The vast majority of young investors were unable to discount investment hype via social media, a big concern given the number of scams doing the rounds, as well as very suspect FX and crypto ‘traders’ pushing their services. It is vital that any red flag is acted upon by investors, and crucially, any fraudulent activity is reported to both the social media platforms and to the police. Unfortunately, having a poor experience of investing early on in your life if likely to have a big impact further down the line, so avoiding these too good to be true offers is vital.”

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