Optimistic for a quick recovery, millennial and Gen Z investors surveyed are trading equities and derivatives more frequently
In recent years, critics have warned of potential negative side effects from shrinking barriers to self-directed investing, particularly the danger of retail traders being exposed to too much risk. And based on the results of a recent study, those fears might hold especially true for the younger crowd.
In the latest wave of its quarterly tracking study of experienced investors, E*TRADE found that over half (51%) of Gen Z and millennial investors reported an increase in their risk tolerance since the COVID-19 outbreak hit, 23 percentage points more than the total population. Among investors under the age of 34, one third (34%) said they’re moving out of cash and going into new positions, in contrast to just 19% among all those surveyed.
The fervour for trading appears to be higher among young investors as well, with 51% and 46% self-reporting more frequent trading activity in equities and derivatives, respectively, since the onset of the pandemic. In contrast, 30% of the total population said they’re trading equities more often, and 22% reported more frequent derivatives trading.
Optimism for a quick recovery is also strong among younger investors. Even though only 9% of them said their investment portfolios have recovered from their pandemic-induced losses, 50% believe they’ll be restored in the next six months, compared to just 33% of the total population.
“When it comes to Millennials and Gen Z investors, time is on their side, but that doesn’t mean they can be complacent or act emotionally,” Chris Larkin, managing director of Trading and Investment Product at E*TRADE Financial, said in a statement. “Access to the market has never been easier, so investors just embarking on trading should walk before they run.”
