The majority of people jumping into crypto are young people, eager to make it big in a short time. However, research shows that this group of investors are unaware of the risks they are putting themselves into by going all-in on these instruments.
According to a research by the U.K Financial Conduct Authority (FCA), majority of those investing in cryptocurrencies and other high-risk investments such as forex are young people. The study also found out that those invested don’t understand the basics of investing but are driven by a need for thrill.
Breaking it down, the demographic most likely to invest in these instruments are black, Asian, and other minorities. They are also more likely to be female. Unlike conventional investors that get their financial advice from professionals, this group gets its trading knowledge from YouTube and other online sources. The report added that this gave them a false sense of awareness even though they knew little about such investments’ risks. It also noted that about 78% of such investors relied on instinct to make their financial decisions even though 59% would face a lifestyle disruption if they lost money.
Based on this report, the FCA was looking for ways to advise such investors on the risks of online investments. The authority has also announced that it is taking measures to protect investors from making harmful investments. This will include asking questions before an investor can invest in risky assets like crypto and others.