Young savers more likely to think long-term when dating than when investing
The Financial Conduct Authority has said savers should apply the same principles to investing as they would to dating.
Research from the regulator found that while half (48 per cent) of those surveyed were dating to find a potential life partner, their investment outlook is far shorter.
Only 2 per cent of investors have a timeframe of more than five years in mind when investing and 14 per cent have no timeframe in mind at all.
In addition, just 31 per cent of people were investing to earn more money than they would in a savings account.
Laura Suter, head of personal finance at AJ Bell, said investing is a complicated area, so it’s no wonder that lots of young investors are “bamboozled by social media and end up taking too much risk”.
“Some of the FCA’s results are pretty worrying, with many investors thinking it’s a short-term get rich plan or taking far more risk than they should,” she said.
“One of the golden rules with investing is to plan for the money to be invested for five years or more, so it’s worrying that the research shows only 2 per cent of young investors plan to have the money invested for five years or longer.”
The survey asked 1,000 UK 18-40 year olds who have invested, are thinking about investing, or have previously invested in one or more high-risk investment products.
Social influence
Scrolling through a date’s social media was the most popular way to prepare for a date (57 per cent), though a third (33 per cent) of those surveyed said they were able to ignore hype on a potential match’s social profile.
By contrast, only one in five (20 per cent) were able to discount investment hype.
Those surveyed are also 18 per cent more likely to be influenced by social media when making investment decisions, rather than in their dating choices.
Suter said: “Social media has a lot to answer for, with many people getting into investing for the first time because they hear about people making loads of money almost overnight.
“At best these are exaggerations and at worst they are scams. Lots of young people also use the likes of TikTok and Instagram to research investments, which can be a recipe for disaster.
“It means people will end up investing in far too risky assets or getting lured into scams and losing all their money.”
The FCA said avoiding hype on social media and focusing on investments that suit long-term goals and risk appetite will make for a better investment journey overall.
Red flags
Elsewhere, the research also explored how young investors would react to a ‘red flag’ on both a date and when investing.
These potential red flags included a date being rude to the waiting staff and arriving late, to difficulty getting invested money out, or when the investment opportunity is only available for a short time.
Men are more likely to continue with a date despite spotting a red flag (49 per cent compared to 39 per cent of women), and more likely to push on with an investment after identifying a warning sign (39 per cent compared to 28 per cent).
Ignoring red flags and investing regardless may put money at higher risk, reinforcing the importance of checking if the investments are regulated and of conducting thorough research to ensure an investment is right for individual circumstances.
Lucy Castledine, director of consumer investments at the FCA, said: “It can be an emotional rollercoaster, you’re trying to spot the red flags and hope the expectation lives up to the reality – and that’s just when investing.
“Our research shows young investors are putting more thought into their dating than their investing lives.
“Over the past year, we have seen the temptation of high-risk investments increase as consumers balance stretched household finances against the immediate thrill of a quick return. But this may mean investors are ignoring the red flags.”
The research comes a week before the FCA hosts an event alongside Celebs Go Dating’s Anna Williamson and a panel of money and dating experts.
The event will bring young investors together and encourage them to adopt the same principles when investing as they do when dating.
As higher interest rates and inflation drive newer investors towards high risk, high return assets, the FCA said it is highlighting the importance of spotting the red flags, not letting emotions cloud judgement, and avoiding getting swept up in online ‘hype’.
Castledine said: “We want to help investors re-think their approach by spotting the similarities to their own dating lives and applying the same mindset: thinking of the long-term, doing their research and prioritising values that match theirs.
“We hope this will encourage a more mindful, confident approach to investing in the future.”
sonia.rach@ft.com
What do you think about the issues raised by this story? Email us on ftadviser.newsdesk@ft.com to let us know
