NEW! Our Hero’s Journey tool can help you with your next step towards financial freedom - click here to try now.
Advertiser Disclosure

59% of investors admit lifestyles are at risk from a poor investment – yet high-risk strategies remain popular

59% of investors admit lifestyles are at risk from a poor investment – yet high-risk strategies remain popular
Image source: Getty Images.


The Financial Conduct Authority (FCA) recently teamed up with insight and strategy consultancy BritainThinks to understand why self-directed investors are choosing high-risk investments more than ever.

With cryptocurrencies, investment-based crowdfunding, and foreign exchange investments growing in popularity, how are investors deciding where to put their money? And how much do they understand the risk involved?

Plot your path towards financial freedom with our Hero’s Journey tool!

MyWalletHero is here to help you learn about taking control of your money, whether that’s paying off debt, working towards a short-term money goal, or investing for your future.

This tool can help you understand the next steps on your journey – simply choose a goal that best describes your current interests to get started.

Key findings about high-risk investment

Younger investors are taking on bigger financial risks than ever, according to the FCA report. This is in part due to the easy access to so many investment apps. These apps make investing look easy even to complete beginners.

“Much of the consumer investments market meets consumers’ needs,” says Sheldon Mills, executive director, consumer and competition at the FCA. “But we are worried that some investors are being tempted – often through online adverts or high-pressure sales tactics – into buying higher-risk products that are very unlikely to be suitable for them.”

This new audience pursuing high-risk investments consists mainly of investors under 40 and is predominantly female. They also rely heavily on social media or YouTube for financial tips and information.

Despite their bolder approach to investing, the FCA also found that 59% of those investing this way feel that “a significant investment loss would have a fundamental impact on their current or future lifestyle.”

This means almost two-thirds of those focusing on high-investment risks cannot afford a loss.
In fact, many are taking bigger risks in the pursuit of ‘the thrill of investing’. Others like the status that comes with owning stocks in certain companies. Still, 38% of those surveyed cannot give a clear reason for choosing some investments over others.

The challenges of high-risk investment

Sheldon Mills emphasises that while the FCA wants to encourage people to save and invest, it’s important that they choose risk levels they’re comfortable with. He explains, “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.”

During the survey, the FCA found that too many young investors know little about the market. Many don’t seem to understand the risks involved either.

In fact, 78% of those who responded said they considered some investment types a ‘safe bet’, even though there’s no such thing when it comes to high-risk investments.

Compare stocks and shares ISAs

If you’re planning to open a stocks and shares ISA, choosing the right platform is important. To help you narrow down the choices, we’ve created a list of some of the top stocks and shares ISAs.

What is a sound investment strategy? 

Long-term investments have several advantages over shorter-term high-risk ones. For starters, high-risk investments are more likely to cause stress and lead to rash decisions.

Long-term investments are mostly about a buy-and-hold strategy. You can spend time figuring out where to put your money, then forget about it for years. There’s no emotional attachment so you can be patient and just let the money grow on its own. 

Making investments over the long term can help you ride out the market bumps. Even if there’s a market drop, people who hold investments for a long time will eventually recover. 

In addition, long-term investing is easier. You don’t need expert trading skills, especially if you use an investing app. 

Whatever your strategy, long-term investments using one of these accounts could benefit you massively in the long run.

Are you making these 3 common investing mistakes?

These all-too-common investing errors can cause you to miss out on the long-term wealth-building power that shares can hold….

To help you side-step these pitfalls, and move forward on your path to wealth-building, we’ve created a free report, “The 3 Worst Mistakes New Investors Make”.

Just enter you best email below for instant access to your free copy.

By checking this box and submitting your email address, you agree to MyWalletHero sending you emails with money tips, along with details of products and services that we think might interest you. You can unsubscribe from future emails at any time. You also consent to us processing your personal data in line with our privacy policy, and our cookie statement. For more information, including how we collect, store, and handle personal data, please read our Privacy Statement and Terms & Conditions.


Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.