Despite the economic uncertainty caused by COVID-19, new and experienced investors took to online brokers in droves last year, according to the FINRA Investor Education Foundation and NORC at the University of Chicago. Most of those investors were trying to save for retirement, but were using taxable accounts to do it, the organizations explained in a February paper, “Investing 2020: New Accounts and the People Who Opened Them.”
FINRA and NORC surveyed nearly 1,300 households in October and November 2020. Respondents were selected from NORC’s AmeriSpeak panel.
Fifty-seven percent of respondents opened a new account in 2020, according to the paper. Of those, 66% had never opened a taxable account before.
The new class of investors is younger and more diverse than experienced investors. They also have lower incomes and smaller balances.
“With no-minimum and low-minimum investment accounts now widely available (for non-margin investors), the barrier to entry for retail investing has fallen, allowing greater access than ever before,” according to the paper.
In fact, being able to start investing with a small amount of money was the top reason new investors gave for entering the market (35%), followed by wanting to invest for retirement (27%) and finding cheap stocks thanks to dips in the market (26%). Experienced investors cited saving for a goal other than retirement (25%), investing for retirement (22%) and being able to invest small amounts of money (21%).