May 11, 2021

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The Power of Success

15% of U.S. Stock Market Investors Got Their Start in 2020, Schwab Study Shows

Amidst a global pandemic, economic uncertainties and market volatility, a new generation of investors was born: 15 percent of all current U.S. stock market investors say they first began investing in 2020, 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.

“We’ve seen tremendous growth and engagement among individual investors over the past year as a result of lower trading costs, new products and services aimed at greater ease and accessibility, and the investing opportunities presented by market volatility,” said Charles Schwab senior executive vice president and head of Investor Services Jonathan Craig. “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. And while it’s exciting to see this new generation of investors, the industry now has a call to action – to give this group the tools and services they need to be successful over the long term.”

Generation
Investor (Gen I)

Pre-2020
Investors

Optimistic about the U.S. stock market

72%

63%

Think the stock market will increase in value in 2021

57%

44%

Plan to invest more in the stock market

43%

20%

Plan to spend more time managing their portfolios

30%

19%

Who is Gen I? Opportunistic and eager to learn

With a median age of 35, Gen I is younger than those who began investing before 2020 whose median age is 48, but this new generation of investors spans all age groups: 51 percent of Gen I members are millennials, 22 percent are Gen X, 16 percent are Gen Z and 11 percent are Baby Boomers.

Gen I earns about $20,000 less in annual income, at $76,000 per year, and half (51 percent) lives paycheck to paycheck.

Gen I also had some hurdles to overcome in order to get invested, with more than 60 percent saying the pandemic had a financial impact on them:

Generation
Investor (Gen I)

Pre-2020
Investors

Financially impacted by COVID-19 (NET)

62%

52%

Finances were negatively impacted

39%

28%

Experienced a salary cut or reduced hours

31%

27%

Laid off or furloughed

26%

20%

While Gen I was more financially impacted by the COVID-19 pandemic than those invested before 2020, the group turned its challenges into an opportunity. With found time and unprecedented change, Gen I buckled down and started investing to build an emergency fund (54 percent) and gain an additional source of income (53 percent). And rather than “setting and forgetting,” two in five (41 percent) say they kept better track of their savings and finances, compared to just a third of pre-2020 investors.

But for Gen I, tracking is just the start. They are also hungry for access to investing education and advice:

  • 94 percent want access to information and tools to do their own research

  • 90 percent want educational materials to improve their investing skills

  • 82 percent are interested in access to an investment professional to provide ongoing help and guidance

Focused on saving and long-term goals

Looking ahead, more than half (52 percent) of Gen I members say they will save more once the pandemic subsides, 43 percent say they plan to invest more and 42 percent plan to work on reducing their total debt. When it comes to their investing strategy, Gen I says the biggest surprise during their first year of investing was learning that investing is more about long-term gains then short-term wins, and shifts in their investing approach reflects this is a generation of learners:

Investment approach in 2020

Investment approach in 2021

Buy and hold for long-term gain

56%

72%

Trade for short-term gain

44%

28%

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

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

For more information about how to get started as an investor, the Schwab Knowledge Center has resources across a range of topics including investing basics, managing debt, college savings and retirement planning.

About the Survey

The online survey was conducted by Logica Research from February 1 to February 16, 2021, among a national sample of 1,000 Americans aged 21 to 75 and an augment sample of 200 investors who began investing in 2020 for comparison. Quotas were set to balance the national sample on key demographic variables. Supporting documentation for any claims or statistical information is available upon request. The margin of error for the national sample is three percentage points. Detailed results can be found here.

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube and LinkedIn.

Disclosures

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with 31.5 million active brokerage accounts, 2.1 million corporate retirement plan participants, 1.5 million banking accounts, and $6.9 trillion in client assets as of February 28, 2021. Through its operating subsidiaries, the company provides a full range of wealth management, securities brokerage, banking, asset management, custody, and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiaries, Charles Schwab & Co., Inc., TD Ameritrade, Inc., and TD Ameritrade Clearing, Inc., (members SIPC, www.sipc.org), and their affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent, fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its primary banking subsidiary, Charles Schwab Bank, SSB (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.aboutschwab.com.

TD Ameritrade, Inc. and TD Ameritrade Clearing, Inc. are separate but affiliated companies and subsidiaries of TD Ameritrade Holding Corporation. TD Ameritrade Holding Corporation is a wholly owned subsidiary of The Charles Schwab Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank.

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View source version on businesswire.com: https://www.businesswire.com/news/home/20210408005096/en/

Contacts

Hibah Shariff
Charles Schwab
415-667-0507
[email protected]