Financial Industry Regulatory Authority Investor Education Foundation finds half of investors would accept a guaranteed risk-free 25% annual return

The Financial Industry Regulatory Authority’s Investor Education Foundation published first-look findings from its forthcoming National Financial Capability Study report on retail investors in the United States, indicating weak recognition of common warning signs of investment fraud. When presented with a hypothetical investment offering a guaranteed, risk-free 25% annual return every year for the next five years, 50% of surveyed investors said they would invest. Susceptibility was higher among younger, less experienced and less knowledgeable investors, and among those engaged in higher-risk or hype-driven assets. Sixty-five percent of crypto investors said they would invest versus 44% of non-crypto investors, while 77% of those who had bought a meme stock or viral investment said they would invest versus 45% of those who had not. Reliance on social media was also associated with higher willingness to invest, with 72% of respondents who at least sometimes act on advice from a social media personality indicating they would invest; those relying on social media for financial information were more likely than those who do not (69% versus 42%). Differences by income were limited, with a four percentage-point gap between investors earning under USD 50,000 and those earning USD 100,000 or more, and investors with high investing knowledge were less likely to invest than those with low knowledge (36% versus 49%). The Investor Survey is an online survey of 2,861 adults with investments outside retirement accounts. The full report, titled 'Investors in the United States: A Report of the National Financial Capability Study', is due to be published in December.