The Financial Conduct Authority (FCA) has found that young investors are thinking more long term when dating than investing.
Its 1,000-person survey also found that 48% are dating to find a potential life partner, but their investment outlook is far shorter.
Only 2% of investors have a timeframe of more than five years in mind when investing and 14% have no timeframe in mind at all.
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.
Young Brits are also 18% more likely to be influenced by social media when making investment decisions, than in their dating choices.
The FCA is now partnering with Celebs Go Dating’s Anna Williamson to host an event for young investors – Swipe Left, Invest Right: How the Principles of Dating Can Be Applied to Investing to encourage them to adopt the same principles as they do when dating and become smarter investors.
The survey of 18-40 year old investors, who also use online dating platforms, looked to understand their influences, motivators, risk appetite and research approach in both parts of their life.
As higher interest rates and inflation drive newer investors towards high-risk, high-return assets, the FCA is highlighting the importance of spotting the red flags, not letting emotions cloud judgement, and avoiding getting swept up in online ‘hype’.
Over a quarter of those surveyed (27%) agreed that investing and dating have an initial honeymoon period, while a third (33%) acknowledge they can both be a highly emotional experience.
Acting on the red flags
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% compared to 39% of women), and more likely to push on with an investment after identifying a warning sign (39% compared to 28%).
Also, scrolling through a date’s social media was the most popular way to prepare for a date (57%), though a third (33%) of those surveyed said they were able to ignore hype on a potential match’s social profile.
By contrast, only 20% were able to discount investment hype.
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.
“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.”
Laura Suter, head of personal finance at AJ Bell, added: “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.
“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% of young investors plan to have the money invested for five years or longer.
“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.
“Despite many people creating glitz and glamour around investing, ultimately it should be pretty boring – particularly for first timers. If you’ve just made your first investment you shouldn’t be on a rollercoaster ride of making (and losing) money, instead you should buy one or two well-diversified funds that will steadily rise over time.
“First-timers who want to learn more about investing have a huge wealth of information available to them: a quick Google for ‘first time investor guide’ will give you lots of options – just make sure it’s from a reputable source. While chatting to friends and family about investing is also a great idea, make sure you don’t take their recommendations too literally and that you do your own due diligence before handing over your cash.”