Why investing is like dating

Staci West 15/08/2023 in Equities

A wise friend once told me “Marry first for money, second for love”, and while that may sound mercenary, frequently matters of the heart and wallet can both benefit from a bit of hard-nosed pragmatism, especially when it comes to younger people.

As use of online dating and investment platforms has grown among young adults, the regulator, the Financial Conduct Authority (FCA), is exploring parallels to encourage better investment decisions.

It surveyed 1,000 young investors, who also use online dating platforms, to understand their influences, motivators, risk appetite and research approach in both parts of their life.

Young people, perhaps unsurprisingly, are putting more effort into dating than investing: just 31% of people were investing to earn more money than they would in a savings account, while almost half (48%) invest the time into dating to find a life partner*.

Young investors are also 18% more likely to be influenced by social media when making investment decisions, than in their dating choices*.

Investing is, in many ways, like dating. You do your research, you take a punt on what you hope is a good-returning asset, there’s some risk involved, and plenty of ups and downs along the way.

But while half (48%) of those surveyed by the FCA said they are dating to find a potential life partner, their investment outlook is far shorter.

Only 2% of investors have a timeframe of more than five years in mind when investing and 14% have no timeframe in mind at all*.

Craig Bonthron, co-manager of the Artemis Positive Future fund, admits he can’t recall putting much rigour into finding a date in his 20s (“I was just pleased if someone liked me!”).

But he says the comparison is pretty valid if you’re on the brink of proposing or starting a family.

“Those are serious lifetime decisions. Likewise if you’re buying equities it should be a long-term commitment of at least six or seven years and the right choice could transform your future finances. So you should certainly choose with care.”

As higher interest rates and inflation drive newer investors towards high risk, high return assets, the FCA is highlighting the importance of spotting the red flags, not letting emotions cloud judgement, and avoiding getting swept up in online ‘hype’.

Over a quarter of those it surveyed (27%) agreed investing and dating have an initial honeymoon period, while a third (33%) acknowledge they can both be a highly emotional experience*.

David Coombs runs the Rathbone Strategic Growth Portfolio and has been managing money since 1984. So he has seen a fad or two come and go – and been on his fair share of dates.

He has a fool-proof four point guide to navigating the choppy waters of investing while avoiding the sharks, just like when it comes to dating.

1. Youthful risk taking

When in your 20s, hopefully you have 60 years plus ahead of you, plenty of time to experiment and recover from mistakes. Yes, your date may not pass the parents’ suitability tests, but maybe they’ll earn millions as an influencer. The point is: now is the time to take some risk and invest all or most of your pension in equities. It will undoubtedly be volatile, but the end reward should keep you going ‘till you’re 80.

2. The attraction of experience

You may like to date a more mature person. Someone with experience and some financial stability can be attractive. Of course, they probably won’t go to Creamfields with you, preferring to attend a literary festival in the Lake District instead. But an experienced fund manager may ensure your savings survive the periods of stock market volatility and should understand an economic cycle. You need to make sure, however, that he/she has a diverse team around them to ensure they understand TikTok is not just a noise from a cuckoo clock.

3. Beware the narcissist

No-one likes a date that is boring. An exciting confident individual will probably make the evening go by quite quickly. Narcissism, however, is never attractive and you may feel the need to ghost. In the investment world exciting CEO’s and fund managers can appear enticing but beware good initial performance can be followed by a crash. When investing, humility, longevity and stability are not sexy characteristics, but these individuals are more likely to be there for you when you need support as you get older.

4. Learn to love value

We don’t want dates to be flashy, but two halves of Carling and sharing a packet of Scampi Fries is probably a bit too austere. Looking cheap is not a winner, nor necessarily is a bulging wad of fifties. Authenticity and class are a good bet, or good “value”. A good active manager with a long track record will be more expensive than passive investing but they should prove their value over the long term and probably still be around for your Silver Wedding.


*Source: Financial Conduct Authority, 24 May 2023. All figures, unless stated otherwise, are from Censuswide, commissioned by the FCA to survey 1,000 UK 18-40 year olds who have invested, are thinking about investing, or have previously invested in one or more high-risk investment products.

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