Making investments is becoming trendy among teenagers. Social media is awash with trading tips and guides to making a million.
New mobile phone apps also allow under-18s to try betting on stocks using pretend wealth.
But is a generation being taught to gamble rather than invest? Industry experts have told Money Mail they fear young people are at risk of picking up some very bad financial habits.
New mobile phone apps also allow under 18s to try betting on stocks using pretend wealth. But industry experts fear a generation is being taught to gamble rather than invest
The craze is sweeping social media. TikTok, is flooded with videos promoting stock tips from young traders.
The hashtag ‘stocktok’ has more than 860 million views, with videos such as ‘How to be a millionaire@16’.
Daily users of phone app Trading 212 -which also offers ‘demo’ trading accounts to under-18s – have surged by 2,000 per cent over the past 12 months, to 600,000. In January, the app became the most downloaded in the UK.
‘Learning by bite-sized content on new media is seeing ever-younger generations become increasingly interested in trading,’ says Max Rothery of financial news and analysis app Finimize.
But experts warn this craze could be a gateway to gambling. Martin Bamford, chartered financial planner at Informed Choice, says: ‘Speculating on individual stocks is about as close to gambling as you can get.’
He says: ‘The apps that facilitate day trading on stocks have made the process a game, hyping up the most traded company shares.’
Speculating on individual stocks is about as close to gambling as you can get
Martin Bamford, financial planner
Holly Mackay, founder of product analyst Boring Money, adds: ‘If share prices soar, your teen will think they are a genius and this could create problems down the line when markets have a setback or trendy stocks have a bad year.’
A report published by the Financial Conduct Authority last week warned that many youngsters were being lured into high-risk investments on new apps by the ‘thrill’ of making money.
It found 38 per cent of young people with high-risk appetites no longer saw investing as a way of building savings but as a vehicle for flaunting skill and social status.
A report published by the Financial Conduct Authority last week warned that many youngsters were being lured into high-risk investments on new apps by the ‘thrill’ of making money
However, some experts say teens can learn about the ups and downs of investing sensibly using smartphone apps.
Amy Pethers, from wealth manager Brewin Dolphin, says: ‘It is great to learn about investing from a younger age, and social media and stock market apps have changed the landscape.
‘They’ll teach children it is not easy to pick a stock and harder still to know when to get out.’
Under-18s can sign up for a practice account with Trading 212. Charlie Turland, 15, developed an interest for trading after hearing friends discussing stock picks at school.
The teen, who lives in Tunbridge Wells, Kent, with his mum, invested £50,000 of pretend money in a Trading 212 demo account. In four months, his portfolio has risen to £53,500.
I supervise Charlie’s use of the app. I think it’s a good way for him to start learning about investing
He says: ‘Some stocks have gone up and down in value a lot, so I’m learning about the risks.’
Charlie’s mum, who works for a finance firm, says: ‘I supervise Charlie’s use of the app. I think it’s a good way for him to start learning about investing.’
One half-way house that experts suggest is a better tool for teenagers to learn about investing is the raft of stock market game apps. These can offer a fun way for children to build knowledge.
The Stocks & Forex Trading Game offers an introduction to trading, with the help of pop-up cartoons and quizzes.
Another option is simulation site HowTheMarketWorks, a free game that enables teenagers to learn to play the stock market.
The London Stock Exchange also has a trading simulator which allows under-18s to create a virtual portfolio on the website with a starting portfolio of £10,000.
‘Games are the best way for kids to get started,’ says James Daley from Fairer Finance. ‘For most, the right way to invest is to put your money in investment funds.’
From 16, teenagers can buy real investment funds and shares in the UK using a Junior Isa (Jisa), which a parent or guardian will need to set up for them.
Ms Pethers adds: ‘A child could put £8 of £10, say, in a well-diversified stocks and shares Jisa, and £2 into company shares they’ve chosen. This would mean taking the greatest risk with only a small percentage of the portfolio.’
Money Mail was unable to reach Trading 212 for comment.
Thinking about investing in shares? Read our guides first
Share investing has seen a surge in interest over the past year, with a new breed of investors dubbed ‘lockdown traders’ getting involved.
While investing through a fund, investment trust or simple passive tracker, is often the wisest course of action, some investors want to get involved in buying shares directly.
If you do decide to go down this route, there are some important things to learn about building a balance portfolio, avoiding scams, picking the right investment platform or app and understanding the risk you are taking.
This is Money’s special Share investing channel was set up to help new and experienced investors. You can visit the page at the link above and below is a selection of some of the articles.
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