A new generation of investors is on the rise. This is great news. With better access to markets than ever, it’s important that people wield this freedom and power wisely. We take a look at the data and explain a few things that it’s important for new investors to know.
Who are these new investors?
According to their research, an estimated 400,000 people have signed up for investment accounts in the last year.
It also appears that there’s been a significant rise in younger investors below the age of 40. This is really promising because previous research showed a disappointing number of millennials investing their money. Over 40% of these new retail investors are women, which is also fantastic to see.
What do new investors need to know?
Becoming an investor is an exciting adventure. It’s a positive step toward financial independence.
However, it’s really important that new investors arm themselves with proper knowledge and research. There’s been a huge rise in people on social media giving ‘financial advice’. This is worrying for two reasons:
- Following bad financial advice is a recipe for disaster and could lead to significant investment losses.
- If new investors lose money due to bad advice, it might put them off future investing entirely.
Interestingly, the research does show that new investors are more likely to be furloughed than established investors. The stock market isn’t going anywhere, and it’s important that you only invest money that you don’t need to access anytime soon. Having security and an emergency fund should always be a higher priority than investing.
Where can investors find reliable information?
Not everyone is giving bad advice. Even those who are probably aren’t doing so on purpose.
When you’re looking for reliable information, it’s important to use impartial sources. You should also keep in mind that during a bull market, when everything is going up, everyone will claim that their research is proving to be successful!
Once you get comfortable in the market, the best thing to do is take ownership and control of your investments. This could be by developing your own investing strategy and even using your own stock analysis to suit your goals.
What are some investing basics?
The Boscobel & Partners research shows newer retail investors have a higher appetite for risk. Around 35% of new investors are buying shares in individual companies compared to just 28% of established investors.
Choosing individual stocks can be really exciting, and rewarding, but it’s important that investors have some diversification in their portfolio. If you’re new to investing, carrying out proper research on lots of companies can be overwhelming and time-consuming.
For people completely new to investing, there are some easier ways to get your bearings. Using things like index funds and investment trusts can be a great way to kick off your investing journey with a diversified portfolio.
This is because investing in funds means that you can use the knowledge of experts to manage and organise your investments while you’re still learning. Selecting a fund managed by experienced professionals is always going to be a better option than following the advice from someone on TikTok or YouTube!
Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.