More young people are getting involved with investing outside of their retirement accounts, a recent Financial Industry Regulatory Authority survey found. But their lack of investment experience — and greater reliance on social media for investment ideas — may be placing them at greater risk for fraud and abuse.

Young investors have been a big driver for the rising percentage of investors with holdings outside of retirement accounts, a figure that has climbed steadily since 2015. The percentage of investors under 35 with non-retirement accounts has risen by nine percentage points since 2015, compared to just two percentage points for investors older than 55, according to Finra's survey.

More than one-fifth of all investors have less than two years of experience investing, according to Finra.

The rise of fractional share trading for exchange-traded funds, "commission-free" trading, and cryptocurrencies drove a surge in new investors, said Gary Mottola, director of research at Finra's Investor Education Foundation.

"The pandemic happens, social activity comes to a halt, and people are looking for things to do," he said. "Some stimulus money is available, and we have evidence that some of that was used for investing. We have cryptocurrency emerging on the scene, and of course you have the GameStop stock. All of these factors, both pre-pandemic and post-pandemic, have contributed to a rise in the number of investors with taxable investment accounts, and a more diverse investing population."

New investors aren't just those who have aged into the process, adds Olivia Valdes, senior researcher at the Finra Foundation. Investors who have historically faced barriers to traditional finance have entered the market in the past few years.

"It is showing in some ways the democratization of investing," she said. "Among those people who see that trend increase over time, it's driven in large part by more African American and Hispanic investors. So we see that there's a growth in investors of color."

But a larger population of investors with minimal experience also means more available targets for investment fraud.

"With the influx of new investors, I think they can be targets for fraudsters and con men. There's a whole other world outside the regulated space where people are trying to scam people," Mottola said. "That's part of the education message. It's not just about expense ratios and equities and bonds. It's also about how to protect yourself in the investment markets."

The report found that 31% of investors were worried about losing money to fraud, compared to 43% who said they were not. Younger investors were more likely to report this concern, Mottola said.

And a Federal Trade Commission report released last month found that adults under age 60 were more than four times as likely to report losses from investment fraud than those 60 or older were.

The report also found that 31% of people younger than 60 who reported losing money on a scam in 2021 said it started on a social media platform.

The survey also found younger investors more comfortable with risk.

Thirty-six percent of investors under 35 said they were trading options, compared with 21% of those aged 35 to 54, and 8% of those older than 54. And 23% of investors under 35 reported making purchases on margin, compared to just 3% of those 55 and older.

It is essential for inexperienced investors to understand the risks of such strategies, Mottola said.

"Just knowing that when you're using certain financial products or approaches that you can lose significantly more than your principal is something that's really important and could be lost on some of the younger, new investors given the level of investing knowledge that we're seeing," he said.

The sources investors rely on for financial tips also vary by age, Finra found.

Sixty percent of investors under 35 said they use social media as a source of investment information, compared with 35% of those aged 35 to 54, and just 8% of those over 55.

"The different channels that younger and less experienced investors are using to get their information [are] probably not as important as whether the information they're getting is unbiased and trustworthy," Mottola said. "That's what we need to focus on, not just where they're getting it from, but if the source of that information is something that they can trust and use."