There’s something different about the flood of new investors who entered the market in the last 18 months.
They are younger, more diverse, use technology to make trades and turn to social media to learn about investing and research investment ideas, a new CNBC/Momentive Invest in You survey found.
More than a quarter of investors polled started investing within the last 18 months, and 73% began in 2019 or earlier. Momentive surveyed 5,523 U.S. adults between Aug. 4 and Aug. 9, 2021; of those, 45% are investors.
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The distinctions between the two groups are particularly clear when it comes to what they are investing in, how they make their trades and where they do their research.
New investors are more than twice likely to own cryptocurrencies compared to their more seasoned counterparts (26% vs. 12%) and are three times more likely to use a self-service mobile app as their primary way to buy and sell investments (63% vs. 20%).
Social media also plays a big role for new investors. More than a third said they used social media to research investment ideas, compared to 15% of those who began investing in 2019 or earlier. On the flipside, only 9% researched investment ideas through direct discussions with a broker or financial advisor, compared to 29% of the more seasoned investors.
It’s not surprising that new investors are getting excited about the market. The S&P 500 jumped more than 14% in the first half of 2021. New investors piled into trades like cryptocurrencies and meme stocks, such as GameStop, which ran up earlier this year, and AMC, which hit all-time highs in June.
“We are in the instant gratification era and often we allow that to drive a lot of our investment decisions, when we really need to look at investing in from long-term perspective,” said Matt Aaron, founder and CEO of Washington, D.C.-based Lux Wealth Planning, an affiliate of Northwestern Mutual.