A recent investigation by the radio show of the BBC Business Daily revealed that many of these investors under the age of 35 have one characteristic in common: Dear
The phenomenon occurs in many parts of the world. An example is India, where the number of retail investors has doubled in the past two years, with some 20 million new investors, many from humble origins and inexperienced in the stock market.
Nachiket Tikekar, is 23 years old and studies administration of Business. Since the pandemic began, he has invested all his savings and those of his parents – about $ 30,000 – in stocks.
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“The covid crisis has made people realize that passive income is sorely needed. That’s what led me to invest, “he told Ed Butler, the host of Business Daily.
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Nachiket said that the Indian stock market suffered two sharp drops since he started investing, but that did not deter him. Quite the opposite.
«I think the collapses of the market they present an opportunity, because there are very good actions at a very good price, “he said.
«You have to have resilience. If you want to be successful as an investor, you have to remain calm while the market gets back on track, “he said.
Is strategy he noted allowed him to generate profits of between 30% and 40%.
The risks
But experts and authorities fear that this growing interest in online investments and financial speculation could provoke a new crisis, such as the so-called “dot-com bubble” when the Nasdaq stock index collapsed two decades ago.
Others warn that the danger More imminent is that many of these young and inexperienced investors, who risk their savings, either in the stock market or buying cryptocurrencies, lose all their money.
In the UK, the Bank of England has issued explicit warnings about the increase in the number of risky investments.
Sarah Pritchard is executive director of markets for the UK Financial Conduct Authority (FCA), which is trying to alert these rookie investors through platforms like Instagram and TikTok.
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Pritchard told the BBC why she is alarmed by the growing appetite for risk of these young new investors.
“Our research shows that people between the ages of 18 and 40 are twice as likely to invest in high-risk investments, but when you inquire about their tolerance for risk, it is actually low,” he said.
«To give an example: 70% of the people youths those we surveyed believed that the purchase of crypto assets was protected, so that any loss would be compensated, when it is not.
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The expert also noted that many inexperienced investors do not know that their assets can be reduced rather than increased.
“Almost half of investors who invest without financial advice do not realize that they can lose money because of the risk of their investment. That is what worries us, “he said.
Pritchard noted that there have always been people looking to maximize their income through investments, but “what is new is the speed with which you can do it, with the increasing digitization of our lives.”
According to FCA research, many young people start making risky investments as a way to compete with friends or family, or motivated by what they see on social networks and other media.
While these rookie venture capitalists became active during the pandemic, Pritchard does not believe that the phenomenon will end when the coronavirus ceases to be a threat.
“We know that a million people (in the UK) bought or increased their high-risk investments in the first six months of the pandemic, but we think this is here to stay, as the market changes.”
