Many retail investors started during Covid pandemic: Schwab survey

Pedestrians pass in front of a Charles Schwab bank branch in downtown Chicago, Illinois.

Christopher Dilts | Bloomberg | Getty Images

The pandemic spurred a flood of new retail investors into the stock market, and a survey from Charles Schwab attempts to estimate the size of this new generation of traders.

Based on an analysis of about 500 investors, the brokerage found that 15% of current retail investors began playing the market in 2020. Schwab — which now hosts 31.5 million retail clients and $6.9 trillion in assets because of the retail investing boom — is calling the new wave of investors “Generation Investor.”

“A big part of this growth is Generation Investor — the large number of people who are bound together not by their birth years but by when they got started in their investing journey — who are now on a path to ownership and reaching their financial goals,” said Jonathan Craig, Charles Schwab senior executive vice president and head of investor services.

The firm surveyed 1,000 Americans ages 21 to 75 among a diverse range of demographics and found that 476 of respondents invest in the stock market. Of the nearly 500 investors, 15% started in the stock market in 2020.

Retail trading just wrapped up a record year in 2020, as unprecedented market volatility and Covid lockdowns created a unique opportunity for regular investors to play the stock market’s surprising comeback. JMP Securities estimates the brokerage industry added roughly 10 million new clients in 2020, according to app download data from SimilarWeb. More than 6 million of those clients flocked to Robinhood.

The retail trading boom has continued in 2021, strengthened by the epic short squeeze in GameStop’s stock in January. JMP estimates that more than 7.8 million new retail clients entered the market in January and February.

Schwab found that these new investors are not just young people. They are also an older cohort discovering investing for the first time. Generation Investor has a median age of 35, compared with pre-2020 investors whose median age is 48, Schwab said. More than 50% of Generation Investor are millennials, 22% are Gen X, 16 are Gen Z and 11% are baby boomers.

Schwab found that Generation I was more financially impacted by Covid-19. About 55% of respondents said they started investing during the pandemic to build an emergency fund and 53% said they started to gain an addition source of income.

Generation Investor on the future

Favoring short-term gain

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