CCPC research: consumers are ‘going digital’ with investments as majority invest online

September 16, 2021

Research released today by the Competition and Consumer Protection Commission (CCPC) has suggested that investors are ‘going digital’ when it comes to investing, as the majority (56%) of those surveyed make new investments online. A further 2 in 3 (62%) of investors cited online resources such as; online banking and investment websites, blogs, social media and financial news websites as their preferred means of seeking investment information. Insights also show that the majority (79%) said they invest for better long-term returns on their money, while almost half (46%) were motivated to invest due to current low interest rates. The CCPC is urging consumers to take a number of steps before investing to ensure they fully understand what they are investing in and the risks associated.

1 in 10 investors hold crypto-assets

The research shows that just over 1 in 3 (36%) of those surveyed has an investment product with 1 in 6 (16%) planning to make an investment in the next 12 months. 1 in 7 (14%) of those who do not currently hold any investments, reported that they plan to make one within the next twelve months. Stocks and shares were the most popular investment option for 1 in 5 (19%), with Government or corporate bonds as the second most popular (12%) asset. Interestingly, 1 in 10 (11%) of those with investments were shown to hold some kind of crypto-asset or cryptocurrency, such as Bitcoin. This increases to 1 in 4 (25%) amongst those aged 25-34, making this the most popular age group for crypto-assets and cryptocurrencies.

Insights also show that half (49%) of investors have increased the number of investment products they hold over the past five years. Under 35s (69%) were most likely to have increased their investment holding over the past five years, compared to 34% of those over the age of 65.

1 in 3 under 35s use social media for investment information

When asked about where they go to find information about investing, 2 in 3 (62%) consumers would use online resources such as; online banking or investment websites, financial news websites, blogs and social media. This is in contrast with almost 2 in 5 (38%) who would go to an adviser in a bank or other type of investment company. 1 in 3 (30%) would seek information from a friend or family member, while a similar cohort (28%) would go to an investment broker for information.

The research also showed that online resources were much more likely to be used by those aged under 35 with 36% saying they would use online sources such as financial news or government sites, 32% reporting they would use social media and 28% saying they would use a bank or investment company website.

Majority go online to make new investments

When it comes to making new investments, over half (56%) of investors surveyed reported they do so online. 1 in 4 (25%) of this cohort said they make new investments either through an online trading or financial provider app. Insights show that for those aged under 35, online investing options rank higher in terms of their preferred means of investing with over 1 in 3 (36%) saying they would use an online trading platform, for example; eToro, or XTB. A similar group (29%) would use an online financial services provider, such as Revolut. In contrast, (22%) would choose to invest through a bank or investment company and only 1 in 10 (10%) would use a broker.

Investors seek better returns in low interest rate environment

When asked about motivating factors, the majority (79%) of investors reported they invested for better long-term returns on their money. Almost half (46%) said they were also motivated to invest due to current low interest rates. Men (51%) were found to be more likely than women (38%) to say that they invest because interest rates are currently low. 1 in 4 (26%) invested for personal enjoyment, admitting they like investing in different types of investments, rising to almost half (47%) of those under 35 who cited experimentation as a key motivator for investing.

1 in 6 don’t know what taxes & investment fees apply

Insights also showed that 1 in 6 (17%) investors admitted they don’t understand what fees and taxes they need to pay on their investments. Additionally, 2 in 5 (43%) investors reported that they don’t closely monitor the performance of their investments. Those aged under 45 (70%) and men (64%) were more likely to say that they closely monitor the performance of their investments.

Speaking about the research findings, Gráinne Griffin, Director of Communications with the CCPC said:

“Our research shows that investors are moving online, not only in terms of how they invest, but also where they seek their investment information. It is clear that the process of investing is becoming increasingly digitalised, and most significantly amongst younger age groups.

While investing online may be easier and sometimes cheaper, we would urge consumers to take the time to look for key information, including who they are buying from, before they invest their money. It is clear that an environment of negative interest rates is attracting consumers to investment products in the hopes of securing better long-term returns on their money. This is understandable, however, it is important that consumers are aware that investment products can often be highly complex, so it is essential consumers understand the type of product they are investing in. Additionally, consumers must also be aware that while they may see the potential for better returns in crypto-assets, the risks can also be much higher compared with traditional products, increasing the probability of losing some or, indeed, all of their money.

While many aspects of our lives have moved online, when it comes to investing, without the proper advice, support and guidance, there is a danger that some consumers could find themselves in a financially precarious position where they have invested in a product that does not suit their needs, is too risky given their circumstances, or where they have invested money that really they can’t afford to lose. Consumers need to be very clear on how their investment product works, if it is regulated and any taxes and fees that may apply. We would strongly encourage anyone considering investing to get financial advice beforehand.”

Remember to take the SMART steps before investing

• Seek expert financial advice to make sure you are making the best financial decisions for your needs. Investment products can be complex, so it’s important to understand what you are signing up for.
• Make sure to invest with a regulated financial adviser, broker, bank or investment firm, otherwise you will not have access to the Investor Compensation Scheme if they go out of business or the Financial Services and Pensions Ombudsman.
• Assess your risk appetite so that you understand your attitude to risk before investing and make sure that the investments you choose reflect your risk appetite. If you deal with a regulated entity they will carry out a risk assessment before you invest.
• Remember that, crypto-assets (including cryptocurrencies) are largely unregulated by the Central Bank of Ireland, or other central banks in the EU. This means that not only is there a higher risk that you could lose your money, but you have little or no consumer protections.
• Taxes & fees may apply so make sure you fully understand how much you will have to pay in fees and taxes before you invest.

The full research report can be viewed here

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