The New York Stock Exchange was founded in 1817. In the last 200 years, investing has seen its highs and lows. But in 2019, the topic of investing has become more pronounced. Who invests and why they choose to do so is a conversation that does not just impact the market, but that also sheds light on the way individuals perceive their own abilities. CivicScience asked almost 2,000 U.S. adults about why they choose to invest in the stock of certain companies.
Personal Interest is Key
The data illuminate a trend: those who invest primarily do so as a result of general research and personal interest. Trailing in second are those who invest as a result of paid advice from a financial advisor.
This top line information suggests that a great deal of investment is informed not by professionals in the industry, but by curious laypeople.
Further data revealed that this behavior–research in stocks due to personal interest–is part of a larger love of learning. Those who value education the most (indicating it as a passion of theirs) are also the most likely to take personal advice from friends and family or perform their own research.
Varying Degrees and Approaches
Given the fact that stocks and investing are not generally taught in school, it only makes sense that investors who go it alone are not strangers to acquiring education–whether from their own social circles, or from institutions.
Those with the least amount of education are the most likely to trust their investing to a financial advisor.
This could indicate that, while education does make individuals more confident in their investing abilities, there may come a point when the demands of life and an abundance of money makes it easier to delegate investment research to a paid source.
As it stands, the data present a theory that education plays a major role in how people choose stocks. The fact that those who are earning less money are more likely to trust the advice of a financial advisor echoes this theme: paid advice could bridge the gap between those who are confident in their own investing research and those who are not, as well as those who have time to research their investments and those who do not. Financial advisors may be a gamble, but they are one that lower-income investors are willing to take.
A Matter of Confidence
When evaluated through the lens of gender, women are far more likely than men to seek out investment advice from a financial advisor.
And while it is impossible to characterize every respondent, what is clear is that investing with personal research could also be closely related to age, and the way in which investing has evolved through the generations. Those who are 55 and up are the most likely to use a financial advisor. Whether that is the result of established patterns, less familiarity with internet resources, or less desire to become intimately involved with the details, the correlation is clear.
In 2019, the reasons behind investing are rooted in a variety of factors that include education and confidence. Whether that education is self-taught or paid, and whether that confidence comes from trusting oneself or someone in the business, U.S. adults are not keen on throwing money at an investment, without understanding where it’s going.