DriveWealth, LLC, a pioneer in fractional investing and embedded finance, today released “The New Investor Phenomenon: A Wave of Opportunity,” a guide to understanding the mindset of the global retail investor. Spurred by the onset of COVID-19, the Retail Revolution marked a new era where huge swaths of investors entered the markets and changed what it means to be an “investor.” While their investing behaviors might seem like an anomaly, DriveWealth’s guide reveals insights about the psychology behind their trades–their motivation to participate in the markets, the tools they’re using to trade, and the tools they still need to take on the decade of the digital investor.
Key findings from DriveWealth’s guide include:
- Remote living resulted in remote investing: While capital markets were undergoing a mobile technology revolution during the years leading up to COVID-19, the sudden, total shift to remote living drastically accelerated that transformation and created opportunity for a new generation of investors. 35% of active investors got their start during the pandemic, including those in emerging markets like South Korea (56%), Indonesia (53%), India (51%), and the Philippines (48%).
- New investors skewed young: About half of all Gen-Z investors opened their first account during the time period of March 2020 to August 2021, with 59% of this generation opening their first account in LATAM, 68% in APAC, 63% in the Middle East, 49% in Africa, and 23% in the U.S. Across all regions, the percentage of investors with less than $10,000 who made their first investment during this period was significantly higher than all other wealth tiers.
- Tech-savvy investors turned digital: Technological advances and market forces helped drive this new wave of investors. Across all regions, more than 40% of investors opened their most recent investment account on a mobile app and 31% traded digital assets as their first investment. Regardless of available technology, in 18 of 23 markets surveyed, the most common motivation to start investing was low account minimums.
“This new paradigm of investing is being driven by factors that are breaking down the traditional barriers to investing. Embedded finance platforms are making the markets more accessible than ever before, with mobile technology making it easier for investors of all ages to tap the markets from the comfort of their own homes,” said Bob Cortright, Founder and CEO of DriveWealth. “As we dive deeper into the decade of the digital investor, financial services providers have an incredible opportunity to engage with investors further by equipping them with the tools they need to become owners of their financial futures.”
Study results pointed to significant opportunities for financial providers in the new landscape of investing. 76% of respondents indicated they would prefer to access financial information and education through mobile investing apps, and 87% agreed that the ability to invest very small amounts was a good way to learn about investing.
“Two years into the pandemic, the world has reached a historic inflection point, not only in terms of access to capital markets, but also regarding the opportunity providers have to build even stronger connections with retail investors,” said Harry Temkin, Chief Information Officer of DriveWealth. “The ability for providers to offer fractions of stocks has been one of the most significant evolutions in trading because it’s giving investors the power to enter the markets using small, yet meaningful, amounts. Providers must offer the technology and tools investors need to make the markets even more accessible, or risk becoming irrelevant.”