44% of investors wished they’d done more research and it could mean investments aren’t right for them
Published on July 8, 2022 by Blackstone
A worrying survey indicates that many investors don’t fully research their options, and later wish they’d spent more time doing so. While it can be tempting to make quick or emotional investment decisions, you might make ones that aren’t right for you.
The research, which was carried out by the Financial Services Compensation Scheme (FSCS) and the Financial Conduct Authority (FCA), found that 44% of investors that held investments between £100 and £50,000 wish they’d spent more time researching their options.
Their main reasons for not initially carrying out research is that it’s too “time-consuming” and “complicated”.
Not only does a lack of research mean you could choose investments that aren’t appropriate for you, but it could also leave you open to scams. If you make a snap decision, you’re more likely to overlook red flags.
For example, 27% of investors said they were more likely to invest if there was a time-limited offer, despite this type of pressure often being used by scammers. A fifth of investors also said they don’t know if their investment is FSCS protected, which could mean they wouldn’t receive compensation if a firm failed.
The responses consumers gave when asked what they spent the most time on, demonstrate that few are spending enough time researching their investments. The top five responses were:
- Choosing a holiday (31%)
- Buying a house (26%)
- Doing laundry (24%)
- Buying a car (24%)
- Checking social media (19%).
With this in mind, it’s not surprising that more than 4 in 10 later wish they’d spent more time researching investments.
5 things to do when you’re making investment decisions
1. Make time for investment research
If you want to invest, carve out some dedicated time to research your options.
Among young investors aged between 18 and 24, 13% said they were most likely to make investment decisions while watching TV and 11% while they were at the pub. Distractions can mean you overlook crucial information, from signs of a scam to details about the risk profile of the investment.
While you may have an investment opportunity in mind, it’s just as important to explore the alternatives too.
2. Don’t follow a trend
After hearing about an investment opportunity from others, you may be more likely to skip researching it.
1 in 10 Brits said they invested because their friends had, and 14% said they had been persuaded to invest after it was promoted by a celebrity or social media influencer.
You should always review your investment decisions with your goals and financial circumstances in mind. Just because an investment opportunity is right for someone else, does not mean it’s also appropriate for you.
3. Understand your risk profile
All investments come with risk. It’s essential that you understand what level of risk you’d be taking if you pursued an investment.
Weighing up what an appropriate level of risk is for you means considering many factors, from what your investment goals are to the other assets you may hold.
4. Review the opportunity and the company
When you start researching options, spend some time gathering the basic qualitative information.
This should include the type of investment. For example, would it involve investing in individual stocks or bonds, or through an investment fund? In addition, going over the basics of the company or organisation can help you understand how you’d make a return and the risk involved.
5. Gather quantitative data
While past performance isn’t a reliable indicator of future performance, the data can still be valuable.
Information on revenue, earnings per share, and net income can provide an insight into how a company is likely to perform and help you create a suitably diversified portfolio.
Do you want help reviewing investment opportunities?
If you don’t want to spend time researching investments or aren’t confident about making decisions yourself, we can help. We’re here to offer advice and can manage your investment portfolio on your behalf with your goals in mind, as well as ensuring it fits into your overall plan.
Please contact us to discuss investment opportunities that could help you grow your wealth.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.