Key Takeaways
- Retail investing has become more popular since the COVID-19 pandemic hit, and this has led to a rise in individual stock trading.
- Retail investors focus on buying and selling ETFs, securities, and mutual funds, and typically start investing a small amount of money with the aim of growing it.
- The majority of retail accounts do not trade frequently, with the average customer of most retail brokers trading roughly once a month.
- Popular online brokerages for retail investors include Robinhood, Fidelity, Schwab, and Vanguard.
- The increase in retail investors has created a significant impact on the stock market, with individual investors making up roughly 19.5% of equity trading volume in the United States in 2020.
Retail investors are individuals, not professionals, who focus on buying and selling ETFs, securities, and mutual funds all on their own. They typically only put a small amount of money into the market in order to start investing their funds in a smart way that will allow their money to grow in the short term or in the long run, depending on what their financial goals are.
In the recent past, we have seen an increase in interest in retail investing, and a lot more people have been giving it a try. As you will see with the stats that we have compiled for you below, more and more people have decided to invest their money in this way, especially since the COVID-19 pandemic changed just about everyone’s life.
Top Statistics
- Around 15% of retail investors today got their start in 2020.1
- Retail investors made up around 17% of the market in January of 2020, but that number was >25% in July and August of that year.2
- Many retail investors have used the popular Robinhood online brokerage to get started. Their median age is 31.2
- Combined, there are over 100 million users or accounts at just six of the most popular online brokerages for retail investors.2
- In January of 2021, the number of trades made using the biggest retail e-brokers was up, with 8.1 million average daily trades. That is around 23% higher than the 6.6 million shares from December 2020, which was a record.6
Get to Know Generation Investor
Generation Investor is the name that Schwab has given to investors who began trading in 2020.1 Below are some stats that can help shed some light on what these individuals hope to gain by entering the trading market.
- Generation Investor is made up of people from various generations. Roughly 11% of them are Baby Boomers, while around 16% of them are Generation Z. Approximately 22% are from Generation X, with the largest portion (over 50%) being Millennials.1
- The median age of people who are considered a part of Generation Investor is 35. Before 2020, however, the median age of investors was 48.1
- Around 43% of people in Generation Investor have shared that they have plans of investing more in the market.1
- Roughly 75% of people who can be deemed part of Generation Investor have stated that they feel positive about the stock market in the United States. That makes them more optimistic than investors who have been in the market since before 2020, as 63% of them feel confident about the future of major averages.1
- While around 44% of investors who were in the market before the pandemic feel that there will be an increase in the stock market in 2021, over 50% of those from Generation Investor feel that it will increase.1
The Influence of COVID-19 on Retail Investors
It turns out that the number of retail investors grew substantially since the start of the COVID-19 pandemic, and many of the people within Generation Investor chose to invest because of the hit they took financially during the pandemic.1
Here are some interesting statistics that show the growth from 2020 to 2021.
- In 2020, 44% of new investors were focused on what they could earn in the short run. But in 2021, roughly 28% of them were interested in taking that route again.1
- Roughly 55% of people who responded to a survey stated that they began investing in an effort to get an emergency fund together during the pandemic.1
- 53% of people surveyed stated that they began investing during the COVID-19 outbreak because they needed another income source.1
The Impact of Retail Investing on the Stock Market
In 2020, experts began seeing an increase in what’s known as individual stock trading. That year, this type of trading reached a 10-year high.3 It is interesting to look at the rise of retail investing, so here are some stats to illustrate that.
- In 2020, individual investors made up roughly 19.5% of equity trading volume in the United States.4
- To see just how far retail investing has come in recent years, it is a good idea to look back at where it used to be. For example, in 2019, retail trades made up around 14.9% of all order flow, and in 2010, they made up around 10.1%.3
- Individual market activity makes up around 20-25% of the overall market activity, varying from one day to another.3
- The majority of the retail accounts that have been established do not trade frequently, and the average customer of a lot of retail brokers will trade roughly once a month.5
A Quick Look at the Most Popular Online Brokerages
The great thing about retail trading is that just about anyone can get into it, especially with the help of online brokerages that make the process as simple and straightforward as possible. Here is a list of some of the top brokerages, along with how many accounts and users they have, as reported in January 2021.2
- The Robinhood platform, which made headlines in the world of retail trading recently, has grown dramatically over the years. In 2020, it had around 13 million users, compared to 10 million in 2019 and 6 million in 2018.7
- Fidelity, Schwab, and Vanguard are the biggest of the top brokerages. Fidelity boasts over 32 million brokerage accounts, while Schwab has over 29 million accounts and Vanguard has over 30 million users.2
- Other popular brokerages include Webull, which has around 15 million users, and Interactive Brokers, which is much smaller with around 1.1 million accounts.2
Overall, a lot of new retail investors have decided that they want to put their money in the stock market in an effort to grow their savings and prepare for the future. Only time will tell if those new investors will remain in the market or if they will decide to get out. In the meantime, it’s no surprise that so many people have been talking about retail investing in the recent past, and it’s also clear to see that there are several good reasons for investing your money this way.
