Young traders are taking ‘big financial risk’ in investing apps


RF markets phone retail

The British market watchdog has warned that popular investment apps are exposing young consumers to big financial risks by luring them into inappropriate cryptocurrencies and other speculative investments.

The Financial Conduct Authority released an investigation Tuesday that found that 59% of investors in high-risk products would face financial difficulties if they took a significant loss in their positions. More than four in ten investors, the FCA found, did not recognize that losing money was one of the risks of their actions.

“We are concerned that some investors may be tempted, often through online advertisements or high-pressure sales tactics, to buy riskier products that are highly unlikely to be right for them,” Sheldon Mills, CEO of FCA consumption. and competition, it said in a statement.

The FCA surveyed 550 people who were considering or already making business decisions, with a focus on people new to self-directed investing, who are more likely to be younger, female, and not white.

The regulator’s warning comes after the surge in retail over the past year, driven by low-cost shopping apps and social media posts, including Reddit message boards. The sharp swings in GameStop Corp. shares, triggered by retail investors, recently he faced scrutiny from US lawmakers.

While there has been less frenzy in European markets, authorities in the region have warned investors about the risks of losing money. British investment platform Hargreaves Lansdown Plc It said this month that it has seen large volumes of international equity trading, driven by interest in US stocks.

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