A chart displaying Apple’s stock price on a smartphone app.
Jaap Arriens | Nurphoto | Getty Images
LONDON — Retail investors have not been scared off by the fall in stocks this year.
In 2023, most individual investors plan to invest the same amount or more despite the cost of living crisis, according to a new survey by London-based investment news platform Finimize.
According to the Finimize survey, only 1% of retail traders plan to sell their investments in the new year, while 65% will continue to invest and 29% plan to add to their portfolios.
“These data are proof that even in the current market environment, the majority see volatility simply as part of the business cycle thanks to access to information and growing investment experience,” said Max Rofagha, CEO of Finimize, in a press release on Wednesday.
“Furthermore, it is clear that the retail investor narrative is changing. For example, previously the focus was on the behavior of a small population of day traders.”
The survey of more than 2,000 retail investors in Europe, Asia and the United States found that more than 80% of retail investors believe the worst of the stock market rout will be over within six months.
The majority (72%) of traders plan to back individual stocks next year, with 64% favoring Big Tech names like Apple, Microsoft, Google and Meta.
Meanwhile, 38% of retail investors plan to invest in crypto, even amid fallout from the collapse of Sam Bankman-Fried’s FTX crypto exchange.
Around 56% of traders think bitcoin will trade higher, compared to 44% who think it will trade lower. Most retail investors (58%) would invest more in crypto if it were more regulated.
Without a doubt, retail’s biggest financial concern is the cost of living crisis. Consumer budgets are constrained by high inflation, and that has dealt a blow to equities as central banks raise interest rates to rein in soaring prices.
More than half (55%) of retail investors said their biggest financial concern right now was the rising cost of living. Right behind this were higher interest rates, with 28% of traders citing this as their biggest fear.
The role of retail investors in influencing the market made headlines last year after a community of passionate newbies on Reddit and other social platforms boosted shares of the US games retailer. GameStop.
Despite this, so-called “meme stocks” are not a priority for most retail investors, according to Finimize, with 84% having never invested in a meme stock.
“GameStop mania has been a flash in the pan, recent attempts to organize a similar movement have struggled to gain traction,” Max Rothery, vice president of community at Finimize, told CNBC.
“As the environment becomes more uncertain, we expect retail investors to have lower trading volumes but continue to invest.”
The retail investment community is expected to make up 61% of all assets under management globally by 2030, up from 52% in 2021, according to wealth management strategy consultancy Indefi.
Finimize says it has over a million users worldwide. The company was acquired by asset management giant Abrdn, formerly Standard Life Aberdeen, late last year.