15% of U.S. Stock Market Investors Got Their Start in 2020

Thu, 08 April 2021  |  investing 

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.”

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:

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:

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.”

Source: Charles Schwab