The Rise of the Investor Generation: 15% of US Investors Started During the Pandemic

Woman working from home due to restrictive measures, lockdown and quarantine due to pandemic Coronavirus.
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Approximately 15% of all current U.S. stock market investors say they first began investing in 2020, creating a new generation of investors amidst a global pandemic, economic uncertainties and market volatility, 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,” the survey notes.

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Schwab dubs this new group of investors “Gen I,” and says that the group median age is 35, younger than those who began investing before 2020 whose median age is 48, but this new generation of investors spans all age groups.

“While Gen I was more financially impacted by the COVID-19 pandemic than those (who) invested before 2020, the group turned its challenges into an opportunity.”

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The survey finds that 54% of Gen I started investing to build an emergency fund and 53% to gain an additional source of income. In addition, 42% said they kept better track of their savings and finances, compared to just a third of pre-2020 investors.

This group of investors are “also hungry for access to investing education and advice,” according to the survey, which notes that 94% want access to information and tools to do their own research; 90% want educational materials to improve their investing skills and 82% are interested in access to an investment professional to provide ongoing help and guidance.

In terms of long-term goals, 52% of Gen I members say they will save more once the pandemic subsides, 43% say they plan to invest more and 42% plan to work on reducing their total debt.

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The survey also found that Gen I’s biggest surprise during their first year of investing was learning that investing is more about long-term gains then short-term wins. In 2020, 56% say they invested to hold for short-term gains, compared to 44% to trade for long-term gains. In comparison, in 2021, 72% plan to invest for long-term gains, while 28% will trade for short-term gains.

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Finally, while 38% of Gen I have a written financial plan in place, 41% say that they have not thought about the tax-efficiency of their portfolio and 51% say they do not fully understand how fees work.  Many also said they have important life milestones on the horizon — such as moving to a new state or home (21%), starting a new career or job (24%) and preparing to have a baby (14%).

“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,” Andrew D’Anna, senior vice president for Schwab’s retail client experience, said in the survey. “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.”

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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