Over half of young investors indicate they are
trading more frequently since the outbreak
E*TRADE Financial Corporation (NASDAQ: ETFC) today announced
results from the most recent wave of StreetWise, the E*TRADE
quarterly tracking study of experienced investors. Results show
trading trends among Gen Z and Millennial investors during the
COVID-19 crisis:
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the full release here:
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(Graphic: Business Wire)
- Risk tolerance skyrockets since the pandemic. Over half
(51%) of Gen Z and Millennial investors say their risk tolerance
has increased since the coronavirus outbreak, 23 percentage points
higher than the total population.
- They are taking cash off the sidelines. Over one in
three investors (34%) under the age of 34 said they are moving out
of cash and into new positions, 15 percentage points higher than
the total population.
- And they are trading more frequently. Over half of
investors (51%) under the age of 34 said they are trading equities
and 46% said they’re trading derivatives more frequently since the
pandemic, compared to 30% and 22% of the total population,
respectively.
- They’re optimistic for a quick recovery. While only 9%
of young investors said their investment portfolios have recovered
since the beginning of the pandemic, 50% think it will happen in
the next six months, compared to 33% of the total population.
- Health concerns come first, but portfolio concerns are a
close second. Personal health (58%) and investment portfolio
(53%) concerns remain the top worries for young investors in the
wake of the pandemic.
“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,” said Chris Larkin, Managing Director of Trading and
Investment Product at E*TRADE Financial. “Access to the market has
never been easier, so investors just embarking on trading should
walk before they run. A thoughtful and disciplined approach is
key—do your research, set up watch lists, and align your trading
strategy with your goals and risk tolerance.”
Mr. Larkin offered additional guidance to young investors
getting started with trading:
- Do your homework—don’t get caught up in stock fads. Like
any purchase, impulse buying is never the way to go. Look at both
the fundamental and technical indicators of a stock before diving
in. Investors may use fundamental analysis to narrow down the
choice of stocks and compare companies side by side, while
technical analysis may come into play as they enter and exit
positions and manage risk.
- Learn the full spectrum of options trading. While young
investors may gravitate to options to speculate on the future price
of a stock in either direction, the reality is these derivatives
are also used to leverage, hedge, and generate income. Leverage
allows a trader to use less money to gain exposure to the movement
of a stock’s price, while hedging is about reducing risk. Options
can help protect trades—or an overall portfolio—in case things
don’t work out quite as planned. Lastly, one of the biggest reasons
investors trade options is to produce income—some options
strategies let an investor collect money on existing or future
stock positions. Of course, investors of all ages should understand
that the existing stock may have to be sold for less than the
current market price. Options trading is not appropriate for
everyone and there are risks associated—as with any investment
vehicle. Know your long-term goals and risk tolerance before
getting started.
- Test drive trading ideas. Many firms offer paper trading
that allows traders across experience levels to test drive any
investing idea—from simple equity trades to complex options
strategies—without committing actual capital. Monitor a paper
trading portfolio and easily modify to analyze new scenarios after
executing a trade.
E*TRADE aims to enhance the financial independence of traders
and investors through a powerful digital offering and professional
guidance. To learn more about E*TRADE’s trading and investing
platforms and tools, visit etrade.com.
For useful trading and investing insights from E*TRADE, follow
the company on Twitter, @ETRADE.
About the Survey
This wave of the survey was conducted from July 1 to July 9 of
2020 among an online US sample of 873 self-directed active
investors who manage at least $10,000 in an online brokerage
account. The survey has a margin of error of ±3.20 percent at the
95 percent confidence level. It was fielded and administered by
Dynata. The panel is broken into thirds of active (trade more than
once a week), swing (trade less than once a week but more than once
a month), and passive (trade less than once a month). The panel is
60% male and 40% female, with an even distribution across online
brokerages, geographic regions, and age bands.
About E*TRADE Financial and Important Notices
E*TRADE Financial and its subsidiaries provide financial
services including brokerage and banking products and services to
retail customers. Securities products and services, including
options, are offered by E*TRADE Securities LLC (Member FINRA/SIPC).
Commodity futures and options on futures products and services are
offered by E*TRADE Futures LLC (Member NFA). Managed Account
Solutions are offered through E*TRADE Capital Management, LLC, a
Registered Investment Adviser. Bank products and services are
offered by E*TRADE Bank, and RIA custody solutions are offered by
E*TRADE Savings Bank, both of which are national federal savings
banks (Members FDIC). More information is available at
www.etrade.com.
Options transactions are intended for sophisticated investors
and are complex, carry a high degree of risk, and are not suitable
for all investors. For more information, please read the
Characteristics and Risks of Standardized Options prior to applying
for an account.
The information provided herein is for general informational
purposes only and should not be considered investment advice. Past
performance does not guarantee future results.
E*TRADE Financial, E*TRADE, and the E*TRADE logo are trademarks
or registered trademarks of E*TRADE Financial Corporation.
ETFC-G
© 2020 E*TRADE Financial Corporation. All rights reserved.
E*TRADE Financial Corporation engages Dynata to program, field,
and tabulate the study. Dynata provides digital research data and
has locations in the Americas, Europe, the Middle East and
Asia-Pacific. For more information, please go to
www.dynata.com.
Referenced Data
My risk tolerance has ________since the
Coronavirus outbreak.
Total
<34
Top 2 Box
28%
51%
Greatly increased
8%
20%
Somewhat increased
20%
31%
Stayed the same
45%
31%
Somewhat decreased
22%
14%
Greatly decreased
5%
4%
Bottom 2 Box
27%
18%
When it comes to your portfolio for the
next six months are you considering any of the following
strategies?
Total
<34
Move out of current positions and into
cash
14%
24%
Move out of cash and into new
positions
19%
34%
Change the allocations in my portfolio
23%
25%
Make no changes to my portfolio
42%
17%
Amid the COVID-19 pandemic, would you
say you are trading equities…
Total
<34
Top 2 Box
30%
51%
Much more frequently
8%
19%
Somewhat more frequently
22%
32%
About the same
56%
37%
Somewhat less frequently
10%
9%
Much less frequently
5%
3%
Bottom 2 Box
14%
12%
Amid the COVID-19 pandemic, would you
say you are trading derivatives, (i.e., options and
futures)…
Total
<34
Top 2 Box
22%
46%
Much more frequently
7%
19%
Somewhat more frequently
15%
27%
About the same
63%
41%
Somewhat less frequently
5%
8%
Much less frequently
10%
5%
Bottom 2 Box
15%
13%
How long do you anticipate it will take
your investment portfolio to recover from the hit taken during the
COVID–19 pandemic?
Total
<34
It has already recovered
15%
9%
1-3 months
10%
19%
4-6 months
23%
31%
7-12 months
24%
25%
1-5 years
25%
13%
5+ years
3%
3%
When it comes to the Coronavirus, which
are you most concerned about? Please select your top two
choices.
Total Q/Q
Age <34
Q3’20
Q2’20
Q3’20
Q2’20
My own personal health, and the health of
my family and friends
65%
68%
58%
58%
My investment portfolio (e.g.,
self-directed brokerage account, retirement account, managed
account)
43%
47%
53%
49%
My job and potential job prospects
25%
18%
42%
27%
The effect on the US and global
economies
46%
34%
37%
16%
My ability to afford day-to-day living
expenses (e.g., groceries, rent, utilities, childcare)
18%
17%
34%
33%
My personal vacation and leisure plans
30%
14%
28%
15%
Reopening local economies too quickly
31%
--
26%
--
Possibility of a second wave
40%
--
21%
--
Gen Z and Millennials (young investors) are
defined as age 18–34 years old
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200819005336/en/
E*TRADE Media Relations 646-521-4418
mediainq@etrade.com
E*TRADE Investor Relations 646-521-4406 IR@etrade.com
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