Amidst a global pandemic, economic uncertainties and market
volatility, a new generation of investors was born: 15 percent of
all current U.S. stock market investors say they first began
investing in 2020, according to a new Schwab survey. And they’re
not all young and focused on the next hot stock. Looking ahead,
these new investors are more bullish about their financial
prospects and the market than those who began investing before
2020, and they’re ready to invest and plan for their futures.
“We’ve seen tremendous growth and engagement among individual
investors over the past year as a result of lower trading costs,
new products and services aimed at greater ease and accessibility,
and the investing opportunities presented by market volatility,”
said Charles Schwab senior executive vice president and head of
Investor Services Jonathan Craig. “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. And while it’s exciting to see this
new generation of investors, the industry now has a call to action
– to give this group the tools and services they need to be
successful over the long term.”
Generation Investor (Gen
I)
Pre-2020 Investors
Optimistic about the U.S. stock market
72%
63%
Think the stock market will increase in
value in 2021
57%
44%
Plan to invest more in the stock
market
43%
20%
Plan to spend more time managing their
portfolios
30%
19%
Who is Gen I? Opportunistic and eager to learn
With a median age of 35, Gen I is younger than those who began
investing before 2020 whose median age is 48, but this new
generation of investors spans all age groups: 51 percent of Gen I
members are millennials, 22 percent are Gen X, 16 percent are Gen Z
and 11 percent are Baby Boomers.
Gen I earns about $20,000 less in annual income, at $76,000 per
year, and half (51 percent) lives paycheck to paycheck.
Gen I also had some hurdles to overcome in order to get
invested, with more than 60 percent saying the pandemic had a
financial impact on them:
Generation Investor (Gen
I)
Pre-2020 Investors
Financially impacted by COVID-19 (NET)
62%
52%
Finances were negatively impacted
39%
28%
Experienced a salary cut or reduced
hours
31%
27%
Laid off or furloughed
26%
20%
While Gen I was more financially impacted by the COVID-19
pandemic than those invested before 2020, the group turned its
challenges into an opportunity. With found time and unprecedented
change, Gen I buckled down and started investing to build an
emergency fund (54 percent) and gain an additional source of income
(53 percent). And rather than “setting and forgetting,” two in five
(41 percent) say they kept better track of their savings and
finances, compared to just a third of pre-2020 investors.
But for Gen I, tracking is just the start. They are also hungry
for access to investing education and advice:
- 94 percent want access to information and tools to do their own
research
- 90 percent want educational materials to improve their
investing skills
- 82 percent are interested in access to an investment
professional to provide ongoing help and guidance
Focused on saving and long-term goals
Looking ahead, more than half (52 percent) of Gen I members say
they will save more once the pandemic subsides, 43 percent say they
plan to invest more and 42 percent plan to work on reducing their
total debt. When it comes to their investing strategy, Gen I says
the biggest surprise during their first year of investing was
learning that investing is more about long-term gains then
short-term wins, and shifts in their investing approach reflects
this is a generation of learners:
Investment approach in
2020
Investment approach in
2021
Buy and hold for long-term gain
56%
72%
Trade for short-term gain
44%
28%
While more than a third (38 percent) of Gen I has a written
financial plan in place, many admit that they have not thought
about the tax-efficiency of their portfolio (41 percent) or do not
fully understand how fees work (51 percent). Many also say they
have important life milestones on the horizon—moving to a new state
or home (21 percent), starting a new career or job (24 percent) and
preparing to have a baby (14 percent).
“Now that they’ve dipped their toes into investing, Gen I is
eager to keep learning and evolving its strategies to successfully
build wealth for the long-term,” said Andrew D’Anna, senior vice
president for Schwab’s retail client experience. “What we found in
our survey is that this group is not all short-term risk takers –
they want to make informed decisions backed by education and
professional guidance, which will be important as they navigate
different life events.”
For more information about how to get started as an investor,
the Schwab Knowledge Center has resources across a range of topics
including investing basics, managing debt, college savings and
retirement planning.
About the Survey
The online survey was conducted by Logica Research from February
1 to February 16, 2021, among a national sample of 1,000 Americans
aged 21 to 75 and an augment sample of 200 investors who began
investing in 2020 for comparison. Quotas were set to balance the
national sample on key demographic variables. Supporting
documentation for any claims or statistical information is
available upon request. The margin of error for the national sample
is three percentage points. Detailed results can be found here.
About Charles Schwab
At Charles Schwab we believe in the power of investing to help
individuals create a better tomorrow. We have a history of
challenging the status quo in our industry, innovating in ways that
benefit investors and the advisors and employers who serve them,
and championing our clients’ goals with passion and integrity.
More information is available at www.aboutschwab.com. Follow us
on Twitter, Facebook, YouTube and LinkedIn.
Disclosures
The Charles Schwab Corporation (NYSE: SCHW) is a leading
provider of financial services, with 31.5 million active brokerage
accounts, 2.1 million corporate retirement plan participants, 1.5
million banking accounts, and $6.9 trillion in client assets as of
February 28, 2021. Through its operating subsidiaries, the company
provides a full range of wealth management, securities brokerage,
banking, asset management, custody, and financial advisory services
to individual investors and independent investment advisors. Its
broker-dealer subsidiaries, Charles Schwab & Co., Inc., TD
Ameritrade, Inc., and TD Ameritrade Clearing, Inc., (members SIPC,
www.sipc.org), and their affiliates offer a complete range of
investment services and products including an extensive selection
of mutual funds; financial planning and investment advice;
retirement plan and equity compensation plan services; referrals to
independent, fee-based investment advisors; and custodial,
operational and trading support for independent, fee-based
investment advisors through Schwab Advisor Services. Its primary
banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an
Equal Housing Lender), provides banking and lending services and
products. More information is available at www.aboutschwab.com.
TD Ameritrade, Inc. and TD Ameritrade Clearing, Inc. are
separate but affiliated companies and subsidiaries of TD Ameritrade
Holding Corporation. TD Ameritrade Holding Corporation is a wholly
owned subsidiary of The Charles Schwab Corporation. TD Ameritrade
is a trademark jointly owned by TD Ameritrade IP Company, Inc. and
The Toronto-Dominion Bank.
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hibah.shariff@schwab.com
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