Most New Investors of 2020 Are Still Investing: Survey

Trader at computer looking at charts

The biggest improvement in objective knowledge emerged among those investors who specifically cited learning about investing as one of the goals for their new accounts. Investors who did not list learning about investing as a goal for their account did not experience significant changes in their investing knowledge, but they had higher levels to begin with.

When asked what information sources they use when making investment decisions, 33% of new investors cited financial professionals, up 9 percentage points from 2020. In the earlier survey, they had listed information from financial professionals sixth among nine sources, while in 2022, this had jumped to third place, just behind annual reports/company websites and family/friends.

In the 2022 survey, the FINRA Foundation and NORC added questions related to the digital engagement features of investment platforms. New and experienced investors had positive reactions to these platform features:

Allowed them to learn: 70%
Allowed them to customize or personalize the user interface: 57%
Allowed them to receive free cryptocurrency or stock when opening an account: 57%

These were less enthusiastic about these features:

Games of chance when using an account: 35%
Ability to link the user interface to social media: 32%
Ability to select an avatar: 29%

Jump in Cryptocurrency Owners

Twenty-eight percent of new and 22% of experienced investors in the 2022 survey reported holding cryptocurrencies in their portfolios. There are notable demographic differences between investors who do and do not hold cryptocurrency. Holders are younger, more frequently male than female, and much likelier to be Black or Hispanic than non-Hispanic white investors. Moreover, investors who hold cryptocurrency reported lower balances in their investment accounts, compared with those without cryptocurrency holdings.

Cryptocurrency owners also appear to have a different risk profile than other investors. Twenty-six percent said they are willing to take substantial financial risk expecting to achieve substantial financial returns, compared with 7% of nonowners.

Although investors appear to have better objective knowledge about cryptocurrency than investing in general, as measured by the quizzes administered to them, they subjectively believe they know more about the latter. Only 10% of participants said they have high or very high knowledge of cryptocurrency, while 20% said they have high or very high knowledge of investing in general.

The survey found that cryptocurrency holders have higher levels of both objective and subjective cryptocurrency knowledge, with 21% indicating high knowledge levels, compared with 6% of non-cryptocurrency holders.

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