What You Need to Know
- Schwab attributes the growth among investors in part to new products and services.
- This group is younger and earns less than those who began investing before 2020.
- These investors are interested in saving and making informed decisions based on education and professional guidance.
Fifteen percent of all investors in the U.S. stock market say they made their first investments in 2020 — and they weren’t all young, or all focused on the next hot issue, according to survey results Charles Schwab released Thursday.
Schwab attributes the growth and engagement among individual investors over the past year to lower trading costs, new products and services aimed at greater ease and accessibility, and investing opportunities presented by market volatility.
“A big part of this growth is Generation Investor — the large number of people who are bound together not by their birth years but by when they got started in their investing journey — who are now on a path to ownership and reaching their financial goals,” Jonathan Craig, the firm’s head of investor services, said in a statement.
Logica Research conducted the online survey in the first half of February among 1,000 Americans aged 21 to 75 and, for comparison, an augment sample of 200 investors who began investing in 2020.
Who Is Generation Investor?
Gen I, as Schwab refers to them, is younger than those who began investing before 2020, with a median age of 35 versus a median age of 48, but these new investors span all age groups: 51% are millennials, 22% Gen X, 16% Gen Z and 11% baby boomers.
Gen I earns $76,000 per year, about $20,000 less than the older investor generations, and half lives paycheck to paycheck.
Gen I also had to overcome some hurdles in order to get invested: 62% said they were financially affected by the pandemic, compared with 52% of pre-2020 investors.
Despite the challenges, and with found time and unprecedented change, 54% started investing to build an emergency fund and 53% to gain an added source of income.
And rather than “setting and forgetting,” 2 in 5 said they keep better track of their savings and finances, compared with just a third of pre-2020 investors.