Retail investing has changed significantly since the onset of the pandemic, when millions of investors entered the market for the first time, according to a new report.
These new investors have transformed the demographics of the investing population, and new platforms, investment products and information sources have become mainstream.
In the fall of 2020, the the Financial Industry Regulatory Authority Investor Education Foundation and the National Opinion Research Center at the University of Chicago, an independent research institution, surveyed new investors who opened taxable investment accounts during the early months of the pandemic, and compared them with experienced investors who already held taxable accounts but opened additional ones during that period.
The new report details findings of a follow-up survey two years later that received responses from two-thirds of 737 respondents in the original study.
Here to Stay
The new survey found that 79% of both new and experienced investors who opened accounts in early 2020 are still in the market, suggesting a durable rise in the investing population. Although more experienced investors than new ones maintained their new accounts, 16% of the first-time investors did not know whether their accounts were still open, compared with just 5% of their experienced counterparts.
In addition, 46% of experienced and 39% of new investors added funds to their accounts but did not withdraw any during the intervening period, while 31% of the latter made withdrawals, compared with 16% of the former.
When asked to rate their overall investing knowledge, respondents indicated little change since the first survey. But their responses to a five-item quiz showed a modest increase in their objective investing knowledge, driven by improvement in the new investor segment, possibly a benefit of learning by doing.
