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Portfolio > Economy & Markets > Economic Trends

Younger Investors More Likely to Invest for Entertainment, Embrace Risk: FINRA Survey

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What You Need to Know

  • Research from FINRA finds that younger investors are more likely to invest for social responsibility, entertainment or social activity reasons than their older counterparts.
  • It also shows that they’re more comfortable with mobile trading apps and trading higher-risk investments such as cryptocurrency.
  • Many survey respondents displayed poor knowledge about investing.

A new generation of younger and less experienced investors has streamed into the market relatively recently, and they differ considerably from older investors in their investment behaviors and attitudes, according to new research from the FINRA Investor Education Foundation.

“The findings show that younger investors — ages 18 to 34 — are more likely than older investors to invest for reasons that include social responsibility, entertainment or social activity,” FINRA Foundation president Gerri Walsh said in a statement.

“The data also show that younger investors are more comfortable with using mobile trading apps, relying on social media as a source of investment information and trading higher-risk investments — such as cryptocurrencies, options and so-called meme stocks — even though some of these investors appear to be less prepared for the risks.”

The study’s findings are drawn from the investor survey component of the FINRA Foundation’s 2021 National Financial Capability Study. A total of 2,824 U.S. adults with investments outside of retirement accounts were surveyed between July and December 2021.


The survey found that the proportion of investors who began investing in the two years prior to the study, 21%, was nearly as large as the percentage who started in the preceding eight years, 25%.

Younger investors are more likely to engage in riskier investment behaviors. Thirty-six percent reported trading options, compared with 21% of those ages 35 to 54 and just 8% of those 55 and older.

Twenty-three percent of younger investors also reported making purchases on margin, whereas only 12% of those 35 to 54 and 3% of older investors did so.

The percentage of investors who said they were considering cryptocurrencies has increased to 33% from 18% in 2018, and 27% are already invested, up from 12%. Among younger investors and those with less than two years’ experience, more than half are invested in cryptocurrencies.

Eighteen percent of respondents said they had traded shares of GameStop, AMC or BlackBerry, popular meme stocks in early 2021. Some 40% of younger investors reported buying or selling shares of these stocks, compared with about 20% of those 35 to 54 and 4% of older investors.

Investment Approaches

According to the survey, 62% of investors said they place trades through a website. Forty-four percent use a mobile app, up from 30% in 2018, and another 44% contact a financial professional. Younger and newer investors are much likelier to use a mobile app for placing trades than older or more experienced investors.

Nearly all investors surveyed said their chief motivation is to make money over the long term. However, 72% said they also want to make money in the short term, and 65% said they want to learn about investing.

Younger investors are much more likely than older ones to invest for reasons other than long-term profits, such as social responsibility, entertainment and social activity.

The survey found that a majority of investors when making investment decisions most often rely on research and tools provided by brokerage firms, business and finance articles, financial professionals and friends, family or colleagues.

Sixty percent of younger investors said they use social media as a source of investment information, compared with 35% of those 35 to 54 and only 8% of those 55 and older. Fifty-six percent of younger investors use YouTube and 41% use Reddit.

Low Investor Knowledge

Many survey respondents were unaware of or confused about various fees they may pay for investing. Twenty-one percent did not think they pay any kind of fee for investing, and 17% said they do not know how much they pay.

Among mutual fund owners, nearly 38% believe they do not pay mutual fund fees or expenses.

These findings are not surprising when you consider that respondents’ average number of correct answers on FINRA’s 10-question Investor Knowledge Quiz was 4.7. Forty-four percent thought that the past performance of an investment is a good indicator of future results.

Only 29% understood that the main advantage of index funds over actively managed ones is generally lower fees and expenses.


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