Surge of retail investors driven by ability to invest small amounts

Rick Steves

We may be witnessing a shift towards more equitable investment participation. This research offers insights about pathways to financial inclusion and a roadmap to help inexperienced investors, women, and people of color close the wealth gap.

A study conducted by FINRA and NORC at the University of Chicago found that retail investors in 2020 were driven by the market dips caused by pandemic fears and the ability to invest with small amounts.

Investment knowledge was low for all groups of retail investors, but new Investors could only answer 1.4 out of 5 questions correctly on average, they were under the age of 45, were more racially or ethnically diverse, and had lower incomes than experienced investors.

The most frequently cited reason for both experienced and new investors was retirement investments, according to the study. “The spike in new investors demonstrates that people, given access and opportunity, will take steps to participate in the equity markets, potentially benefiting from the historically higher long-term returns these markets offer,” said FINRA Foundation President Gerri Walsh.

“On the one hand, this research offers the investment industry, investor advocates, and policymakers critical insights about pathways to financial inclusion for all Americans and presents a roadmap to help inexperienced investors, women, and people of color close the wealth gap. On the other, low levels of investment knowledge among all types of investors in the sample—new and experienced—underscore the importance of educating investors about risk and reward, costs and fees, tax consequences of investing and other key concepts”, Ms. Walsh added.

Mark Lush, manager and behavioral scientist in the Behavioral and Economic Analysis and Decision-Making (BEAD) team at NORC. “The reality is that investors who opened their first taxable investment account during 2020 were more racially/ethnically diverse when compared to investors already in the market. Our study also found that many of these new investors were prompted to open their accounts because of the ability to invest with a small amount of money. Taken together, we may be witnessing a shift towards more equitable investment participation.”

Of the 1,300 respondents, 38 percent were new investors, 19 percent were experienced entrants who opened a new account in 2020, and 43 percent were holdover account owners who did not open a new account during 2020.

Read this next

Chainwire

Bandit Network’s Points SDK and Brave Ads Power Astar zkEVM’s Quest Platform “Yoki Origins”

“Yoki Origins,” supported by Bandit Network and Brave Ads, introduces a gamified and rewarding experience for Astar zkEVM users, marking a significant milestone in Web3 adoption.

Digital Assets

Crypto ETFs to debut in Hong Kong next week

Hong Kong has authorized six cryptocurrency-based spot ETFs set to launch on April 30, according to Bloomberg.

blockdag

BlockDAG Among The Best New Crypto To Invest In Post 8 Billion Coins Sales; More On Bitcoin Cash Futures’ Launch & Solana Positive Predictions

Explore Solana’s ATH predictions to see whether it can rise after a $17B dip? BlockDAG sells 8 billion coins in presale as Bitcoin Cash Futures launch.

Fundamental Analysis, Market News, Tech and Fundamental

Global FX Market Summary:USD, FED, German IFO ,Gold April 24 ,2024

Mixed US economic data and Fed rate hike uncertainty are causing volatility in the EUR/USD pair, while the Eurozone and gold prices add another layer of complexity.

Market News, Tech and Fundamental, Technical Analysis

EURCHF Technical Analysis Report 24 April, 2024

EURCHF currency pair can be expected to rise further toward the next major resistance level 0.9840, which stopped the pervious waves C and B, as can be seen below.

Digital Assets

Binance’s CZ could stay in prison until 2027, wife begs for mercy

Changpeng “CZ” Zhao, the founder and former CEO of Binance, has apologized for his decisions and accepted “full responsibility” in a letter to U.S. District Judge Richard A. Jones.

Digital Assets

Monex Group expands crypto business with 3iQ takeover

Monex Group has completed the acquisition of a majority stake in 3iQ Digital Holdings, Inc., a Canadian digital asset investment fund manager, as part of its strategy to expand its crypto business.

Education, Fintech, Inside View

How to Get Into Fintech: Best Tips to Succeed

The Fintech sector is experiencing significant growth, with fresh opportunities emerging rapidly.  Innovations such as machine learning and cryptocurrency are revolutionising finance, leading to a need for trained experts.

Digital Assets

FalconX launches Prime Connect on Deribit

“We are pleased to launch Prime Connect with Deribit and look forward to providing our full suite of prime services which allow institutions to confidently scale their digital assets portfolios while trading on exchanges.”

<