By now most of us are aware that investing has become hugely popular over the pandemic – people have more spare money and time to invest. You might be surprised however, at who has been learning to trade, read our article to learn more.
Over the coronavirus pandemic the public have had a keener interest in the state of the economy, this partnered with more free time and arguably more disposable income has allowed for some sidelined hobbies to take centre stage. Amongst gardening and interior design we have seen a huge resurgence in investing!
Social trading platform, eToro has seen a crazy 420% increase in stock trades in 2020 compared to the previous year. The rise of ‘working-from-home investors’ paired with the launch of eToro’s zero commission trading is a winning combination.
If you want to take advantage of eToro’s zero commission, sign up now!
Who are these pandemic investors?
Over the past year millions of people have joined the world of investing. The media has often depicted young people as the main demographic of new investors but this isn’t true! Over the past few years it is true that investors have gotten younger and more women have got involved but over the pandemic it is actually the older generation who’ve been trading from their phones.
Investopedia found around 60% of people who have taken up trading over the last year are between 40 and 74 years old. With 30% of new traders 24-40 that leaves only 4% of new traders being the young folk pictured in the media (18-24). Although eToro, a popular brokerage saw around 40% of their new customer base were under 29 years old.
So how are people learning to trade?
Most people (47%) are learning to invest and trade themselves using a range of resources from websites to books, the least favoured category is the 5% who have learned from social media.
A massive 84% of investors surveyed by Investopedia used financial information websites to learn how to invest with the second most favourable source being financial news outlets.
On top of this a whopping 50% of investors knew very little before the pandemic showing a huge increase in interest in investing money for the future.
So are new traders making a profit?
An incredible 86% of investors say they have made a profit over the last year. When looking at new investors, 53% admit to taking a loss. Interestingly new traders are more likely compared to experienced to hold their portfolio for a short period of a month or less. On the other end of the spectrum we can see most non-trading investors (58%) holding their portfolios for more than 5 years.
Where do you think most new investors are going wrong? Although three-quarters of new traders are confident with their skills, those who admit to mistakes show some interesting results. A massive 56% of new traders hold the majority of their portfolio in only one stock or asset class. Overweighting is an easy mistake to overcome, by trading a variety of assets you can diversify your portfolio and protect yourself from the risk of one asset failing. You’ll thank yourself later when that risky IPO you were going to go all in on flopped. Another common mistake new traders made was being too reactive, 28% traded on a gut feeling alone. To trade successfully the most reliable method is looking at the data and analysing trends, although we’re not saying trading on intuition can’t be successful, it definitely isn’t reliable.
The stats show that new traders typically go for headline investments such as Bitcoin, Tesla, GameStop, Amazon and Apple. Which isn’t really a surprise as it is these very headline names that can get people interested in trading in the first place!