The Barefoot Investor Scott Pape issues dire warning against this one incredibly risky investment – and why it’s a bad idea

The Barefoot Investor has issued a stern warning to ordinary Australians considering taking up day trading, claiming even the smartest traders have gone bankrupt.

Scott Pape gave the advice after a concerned reader wrote to him explaining that her husband, a firefighter, wanted to invest some of their $75,000 savings.

Day trading is a notoriously volatile form of investing in which individuals attempt to profit from short-term fluctuations in stocks, currencies and other assets.

“My husband wants to invest in day trading and has taken a trading course to ‘educate’ himself,” the concerned woman wrote in a column for the Daily telegram.

Scott Pape (pictured), who wrote the 2016 best-selling financial advice book The Barefoot Investor, was questioned about whether day trading was a risky financial move by a concerned woman whose firefighter husband wanted to invest some of their $75,000 savings.

‘I don’t know much about investing and would certainly be the more cautious of the two of us.

She said it seemed “risky,” but her husband assured her it was a chance to “make their money work.”

But Mr Pape was quick to pour cold water on the idea.

“I hear a fire alarm and your firefighting, risk-taking man is running towards danger,” he replied.

“The only problem is, when he starts day trading, it’s your money he’s setting on fire.”

Mr Pape said even the “smartest day traders” he knew had gone bankrupt several times, claiming that investment strategy was even more difficult today with the rise of AI bots that track and predict swings in the market.

“It’s just not a game you can reliably win,” he said.

The financial guru compared the couple’s financial situation to climbing a mountain.

Rather than relaxing in retirement, Mr Pape said the man’s desire to take a crash course in day trading was akin to strapping a snowboard to his feet and performing tricks, rather than enjoy the view.

‘I would like to gently remind him that your money works for you, through your pension. I would focus on how much you have to contribute to live comfortably,” he said.

“Once that’s sorted, I’d get him thinking about all the exciting things he could do with his time, rather than risking his money.”

Day trading is a notoriously volatile form of investing in which individuals attempt to profit from short-term fluctuations in stocks, currencies and other assets (stock image)

In 2021, there were more than 1.25 million active online traders in Australia, with almost half a million placing their first trade on a stock market in 2020, according to research firm Investment Trends.

Almost half of the starters were between 25 and 39 years old.

Only a small portion of day traders make a profit.