COVID fuels new generation investing boom

The findings have come from research firm Investment Trends in a report on online investing during the second half of 2020. 

The research showed that at the end of last year, the population of active retail online investors in Australia reached a new high of 1.2 million. 

During the last year, 435,000 Australians began trading listed investments for the very first time amid the pandemic-induced lockdown. 

Irene Guiamatsia, head of research at Investment Trends, commented that young Australians have increasingly embraced investing, with one in six first-time investors being under the age of 25. 

“COVID-induced market volatility and a low interest rate environment were important prompts for first-time investors entering the market, but even more prominent was the desire to learn a new skill, highlighting how many Australians chose to spend their free time during the lockdowns,” Ms Guiamatsia said. 

The growth in investor numbers has also been driven by strong interest in international stocks, with the number of active international share traders in Australia doubling from 54,000 to 109,000 in the 2020 year.

“The spectacular recovery witnessed by US stocks in the second half of 2020 has captured the attention of a global audience, prompting many Australians to consider investing beyond local equities,” Ms Guiamatsia said.

“A greater choice of investment platforms has been a key driver for uptake, with recent new entrants giving investors more choice than ever.”

But as new, inexperienced investors enter the market en masse, investing platforms face a challenge of providing education at scale, Investment Trends noted. 

Besides lower fees, the areas that retail investors often seek additional support from their main investing platform are education about strategies for the current environment (27 per cent) and daily newsletters (20 per cent). 

“Too many times we’ve heard stories of investors getting caught up in FOMO, making rash short-sighted investing decisions,” Ms Guiamatsia said. 

“But our research highlights that investors are hungry for knowledge, resources and tools to help them build long-term wealth. Investment platforms that effectively support their clients on their investment journey will stand out.”