ShareBuilder Stock Market Investing Survey
May 21, 2010
ShareBuilder, an online discount brokerage, ran a survey of investors at the beginning of this year to find out how the volatile stock market had effected their perception of investing. The criteria that ShareBuilder used was:
“investors between the ages of 21 – 65 who have an investment account that enables them to buy stocks, funds and other securities other than a 401k or 403b”.
The survey included 1,021 non-customers and 912 people who had a ShareBuilder account, here is a look at their analysis of the results.
Stock Market Perceptions
When analyzing the answers, ShareBuilder found that younger investors, 21–39, tend to be more optimistic about the potential of the market than investors in the age range of 40–65. It makes sense to me that a younger demographic would be less risk-averse because they have a longer timeframe until retirement and probably have fewer financial obligations than people at a later stage in life.
ShareBuilder also asked about expected rates of return and found the answers to be closely aligned with the historical performance of the stock market. Based on this, their opinion was that the despite the market troubles over the last few years and problems with the, investors still expect about the same return on their money that the market has shown over the last 75 years.
Investing Advice
One trend that the survey hinted at was that fewer investors are trusting their money entirely to financial planners, brokers, or financial advisors. Due to thier portoflio losses in 2008 / 2009 and some of the problems with financial institutions, the study suggests that more investors are playing a bigger role in how their money is invested.
People are turning to financial websites, blogs, and financial print publications for information and advice on investing. I think it’s great to be informed but I still think it’s smart to seek the guidance of professionals who can look at your specific situation and offer personalized financial advice. There are more and more financial advisors with blogs where you get both the candor of a blog and the experience of a financial professional.
Getting Started Investing
In terms of getting into the stock market, the perception seems to be that you need at least a few hundred dollars to start investing. In their survey, the average amount of money that people said you needed to start investing was $699.
It makes sense that when ShareBuilder asked their own customers that question, 44% responded that you could start investing with $100 or less. With just $4 trades, the ability to invest only a little money at a time, and regular ShareBuilder promotions, they have made it easier for people to get started investing their money. Of course cheap stock trades do lower the barrier to getting started but there still needs to be the desire to invest in the first place.
The study found that the parents of young investors were the single most important influence in getting them started in the market. I can relate to this finding, the whole reason I started buying stocks and mutual funds when I was in high school was because my parents taught me about the market and encouraged me to start investing. ShareBuilder has helped make that easier as well with investment accounts for kids.
Overall it was a pretty interesting survey. Of course, it’s not representative of the whole country but it was encouraging that it did show some investor optimism.
All posts by Ben Edwards
Being young myself, I’ve always been optimistic about the stock market. More so, because I’ve been doing some thorough research on Options, options strategies, and stop/buy orders.
That’s interesting how it makes note of how one should start at 700. I set the table for myself at several thousand; I wanted to make sure I got a hold of enough blue chips that would make DRIP effective.