The Pace of New Investors Entering the Market has Slowed, Investors are Less Comfortable With Risk, Younger Investors Turn to Finfluencers
The FINRA Investor Education Foundation (FINRA Foundation) released today new research, Investors in the United States: Results from the FINRA Foundation’s National Financial Capability Study, which offers insights into the attitudes, behaviors, knowledge and experiences of retail investors in the U.S.
“The latest FINRA Foundation research on investors provides rich insights into how market conditions, technology and generational shifts are changing the profile of investing and reshaping investor behaviors and attitudes,” said Jonathan Sokobin, FINRA Foundation Chair and Chief Economist at FINRA. “This research can serve as a roadmap and essential resource for policymakers, researchers, educators, firms and financial professionals as they continue their efforts to help educate and protect investors.”
FINRA Foundation President Gerri Walsh noted that the findings point to the needs of younger, less experienced investors. “They still struggle with gaps in investing knowledge and risk assessment, which can leave them vulnerable to costly missteps,” Walsh said. “Investor education efforts remain critically important.”
The findings are drawn from the investor survey component of the FINRA Foundation’s latest National Financial Capability Study (NFCS), including a total of 2,861 respondents in the U.S. with non-retirement investment accounts. The report builds on previous NFCS Investor Survey reports (conducted in 2021, 2018 and 2015), and includes new or expanded topics, such as attitudes towards risk, reliance on finfluencers and awareness of investment fraud.
Key Findings:
- New investors. The pace at which new investors are entering the market has declined significantly. In the 2024 NFCS, 8% of investors reported beginning to invest within the last two years—a sharp drop from the 21% who began investing in the two years preceding the 2021 NFCS.
- Investor characteristics. While the overall proportion of U.S. adults with investments held outside of retirement accounts did not materially change from 2021, fewer young adults (21% vs. 26% in 2021), men (40% vs. 43% in 2021), and persons of color (29% vs. 36% in 2021) reported owning non-retirement investments in 2024, largely erasing the gains made in the prior wave.
- Risk attitudes. The proportion of those willing to take substantial risks in their investment portfolios declined to just 8% in 2024 from 12% in 2021. Among investors under 35, those willing to take substantial risk dropped to 15% from 24%. Despite this, over one-third of investors (34%) feel they need to take big risks to reach their financial goals, including 62% of investors under 35.
- Risk-taking. Compared to older investors, those under 35 are more likely to engage in investment behaviors that can carry greater risk, including trading options (43% vs. 10% of those 55 and older) and making purchases on margin (22% vs. 4% of those 55 and older).
- Social media. Twenty-nine percent of investors report relying on social media as an information source. When asked separately about the social channels they use for investing information, YouTube emerged as the most popular, used by 30% of respondents overall and 61% of those under 35.
- Finfluencers. Over a quarter of investors (26%) use recommendations from social media influencers when making investment decisions, including 61% of those under 35 and 57% of those with less than two years of investing experience.
- Meme stock popularity. Thirteen percent of investors report buying meme stocks or other viral investments, including nearly one-third (29%) of investors under 35.
- Crypto interest. While the percentage investing in cryptocurrency in 2024 did not change from 2021 (27%), fewer investors reported considering cryptocurrency investments (either purchasing more or for the first time), dropping to 26% in 2024 from 33% in 2021.
- Investment information sources. The most commonly used sources of investment information are research and tools provided by brokerage firms (75%), recommendations from financial professionals (69%), business and finance articles (67%), and word of mouth from friends/family/colleagues (65%).
- Investment fraud. Concern over investment fraud has increased somewhat. Thirty-seven percent of investors are worried about losing money due to investment fraud, up from 31% in 2021. Still, the vast majority (89%) do not believe they have been targeted in an investment scam.
- Low investing knowledge. On average, respondents answered slightly less than half of the investing quiz questions correctly (5.3 out of 11 questions). Questions about margin and short selling had the most incorrect answers, with over half of respondents answering each incorrectly (55% and 54%, respectively). Notably, 75% of those who actually make purchases on margin incorrectly answered the margin question.
NOTE: The FINRA Foundation will hold a virtual press conference about the report, Investors in the United States: Results from the FINRA Foundation’s National Financial Capability Study, at 11 a.m. E.T. today. Unauthorized use of the press conference video or audio is not allowed.
Please reach out to media@finra.org by 10:45 a.m. to register.
About the FINRA Investor Education Foundation
The FINRA Investor Education Foundation supports innovative research and educational projects that empower Americans with the knowledge, skills and tools to make sound financial decisions throughout their lives. For more information about FINRA Foundation research and education initiatives, visit www.finrafoundation.org.
About FINRA
FINRA is a not-for-profit organization dedicated to investor protection and market integrity. FINRA regulates one critical part of the securities industry—member brokerage firms doing business in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.
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