New research has shown how fast-changing trends are driving investing among young Brits. Interactive Investor’s Camilla Esmund delves into the consequences in today’s Notebook

I’ve previously written about investments and our emotions. Our individual psychologies are perhaps the most under-discussed variable in investment circles, yet our subconsciouses, our biases, our family backgrounds and our world views all play a vital – if little understood – part in how we invest and our relationship with money more broadly.

Recently, I was reading new research from the Financial Conduct Authority looking at behavioural habits and attitudes of younger investors. They surveyed investors aged 18-40, and the results are incredibly thought-provoking. I was struck by one finding in particular: a quarter of young investors admit they make investment decisions impulsively to keep up with current trends. And sadly, two in five investors said they regretted purchasing a ‘hyped’ investment product. 

I was also amazed that 66 per cent of investors said they spend less than 24 hours deciding on an investment, and 14 per cent finalise their decision in under an hour. It seems modern comparison culture and the constant pressure of trying to ‘keep up’ with the latest trends has made its way to the investment landscape.

By comparison, the way I speak about investing for the long-term runs the risk of sounding quite boring; the thing is, the fundamentals of investing are the very basics.

This is not to say there aren’t ways to spice up your portfolio if that suits your stage of life and risk appetite – and you’re fully aware of all the risks – but the bread and butter of an effective investment strategy is staying diversified and staying invested. Sometimes I wonder how this mantra can compete with the ‘fear of missing out’ comparison culture and online trends.

I think social media can be such a powerful force for democratising financial education, and it’s also brilliant people are taking an interest in investing, but I do think setting boundaries is important here. This FCA research is a good reference point for us all next time we see any ‘hyped’ investment product online. It’s really important to understand what you’re investing in before you invest, and the good news is there are some brilliant jargon-free guides out there. I can also personally recommend Interactive Investor’s podcast On The Money, which helps cut through the noise and give you exactly what you need to know before you make your investment decisions.

Top of the stocks 2024

Interactive Investor (II) is the second-largest investment platform in the UK, so we have brilliant insights into how some of the best retail investors are investing. By way of a snapshot, US companies continued to be in high demand for UK investors at the end of last year – with Microstrategy, Tesla and Nvidia topping the list for the most-bought stocks (equities) in December 2024. 

When it comes to investment funds, Royal London Short Term Money Market topped the list for most-bought funds, dethroning Vanguard Lifestrategy 80 per cent Equity which has long been very popular with retail investors on II. Lastly, well-known investment trust Scottish Mortgage was II’s most-bought investment trusts once again in December 2024, after dropping to second place the month before. I’m intrigued to see what 2025 has in store in terms of investor trends.