Consumer watchdog warns of greater risks attached to cryptocurrencies

The overwhelming majority of individual investors claim they understand the risks they are taking, but a significant minority of them do not closely monitor their investments, according to research conducted on behalf of the Competition and Consumer Protection Commission (CCPC).

The research also suggests that younger retail investors are more likely to engage in investment activity for personal enjoyment, while younger investors are also embracing online trading in assets such as cryptocurrencies.

Research firm Ipsos MRBI conducted the research last month with a group of about 1,000 adults, to gauge their attitudes to retail investing. It found that about 36 per cent of them have an investment product.

Of these, 11 per cent were invested in cryptocurrencies and similar digital assets, which the CCPC warned are riskier than other assets. Those aged 25-34 were three times as likely as those aged 45-54 to have invested in crypto assets.

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Gráinne Griffin, the CCPC’s director of communications, said consumers must 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.”

The most popular investment products overall were stocks and shares, followed by Government bonds. But larger numbers of younger investors were buying crypto rather than equities.

Online

CCPC says the research makes clear that many investors, and particularly younger traders, are going online for advice and to execute trades. Roughly two-thirds of those surveyed said they go online for information, while 56 per cent said they make investments online. Those aged under 35 are far more likely than older investors to engage online.

More than nine in 10 investors across all age groups claim to have an appreciation for all the risks involved, but just 43 per cent pay close attention to how their investments are performing. About four in 10 do not believe that there is enough independent investment advice available to help consumers make informed decisions.

“It is clear that the process of investing is becoming increasingly digitalised, and most significantly amongst younger age groups,” said Ms Griffin. She urged retail investors to take the time to research properly. “It is important that consumers are aware that investment products can often be highly complex, so it is essential consumers understand they type of product they are investing in.”