For years,
retail investors have been brushed off as impulsive, emotional, or just plain
clueless. The stereotype hit a fever pitch during the meme stock craze of 2021,
when names like GameStop and AMC became symbols of chaotic, amateur trading.
But Elad
Lavi, Executive Vice President of Corporate Development and Strategy at eToro, argues it’s time to ditch that tired narrative for good. Especially since retailers account for an increasingly larger piece of the global assets under management cake each year.
Retail Investors Are Busting
the “Dumb Money” Myth in 2024
eToro has
released an analysis challenging the notion that individual investors are
prone to impulsive and emotionally-driven trading decisions. The company’s
findings suggest that retail investors are becoming increasingly sophisticated
and are playing a growing role in global capital markets, fighting the “dumb
money” myth.
According
to eToro’s data, 74% of its users were profitable in 2024, with that figure
rising to 80% for members of its premium “Club” tier. These results
appear consistent with the platform’s 2023 performance, where 79% of users and
85% of Club members reported profits.
“Technology
has leveled the playing field, and today’s retail investors have access to the
tools and knowledge they need to succeed,” wrote Lavi on the company’s website. “Our
platform shows that users are not just learning about investing, they are
applying that knowledge to successfully meet their long-term financial
goals.”
Not Just the U.S.
The
importance of retail investors in global markets is growing. They accounted for
52% of global assets under management in 2021, a figure expected to rise to
over 61% by 2030. Additionally, younger generations are entering the market
earlier, with Gen Z investors starting at an average age of 19, compared to 32
for Gen X and 35 for Baby Boomers.
But it’s
not just Americans jumping in. Europe, where retail participation has lagged,
is catching up fast. In 2023, just 7% of E.U. adults had stock market exposure,
and in the U.K., it was 20%. Yet experts at Oliver Wyman predict a boom: by
2028, Europe could see 22 million new brokerage accounts, boosting penetration
from 6.8% to 11.7%.
Meanwhile,
a massive generational shift is underway. Gen Z is investing at 19, far younger
than Gen X (32) or Baby Boomers (35), fueled by a staggering $83.5 trillion
wealth transfer expected over the next two decades, per UBS.
What’s Hot in 2024?
The
investment preferences of retail investors also evolved in 2024. On eToro’s
platform, Nvidia displaced Tesla as the most widely held stock, while Advanced
Micro Devices entered the top ten. This shift reflects growing retail interest
in artificial intelligence and semiconductor stocks.
“The
rise of the retail investor is challenging old models of market behavior,” Lavi
added. “Markets now reflect not just fundamentals, but also collective belief.
Retail investors play an increasingly large part in that belief system.”
Beyond U.S.
borders, eToro users are diversifying globally. Names like ASML Holding
(semiconductors), LVMH (luxury goods), and Rolls-Royce (aerospace) dominate the
top ten non-U.S. stocks, showing a sophisticated grasp of industries driving
the future.
In crypto,
eToro’s “HODLERs” stuck to their guns, with little change in the top ten assets
despite altcoin buzz—proof of a steady, buy-and-hold mindset even through
market dips.
A previous study by eToro also revealed, that as many as 69% of retail investors hold cash in their portfolios.
The Future Is Retail
As the
global wealth transfer continues, with an estimated $83.5 trillion in assets
expected to be passed to younger generations over the next two to two and a
half decades, the influence of retail investors on market dynamics is likely to
grow further.
“Understanding
the behavior of retail investors is now vital to understanding how markets
move,” Lavi concluded.
The retail
investor of 2025 is connected, clued-in, and calling the shots. With their
influence only set to grow, one thing’s certain: the “dumb money” label is
officially dead. Welcome to a new era of investing—one where the little guy
isn’t so little anymore.
For years,
retail investors have been brushed off as impulsive, emotional, or just plain
clueless. The stereotype hit a fever pitch during the meme stock craze of 2021,
when names like GameStop and AMC became symbols of chaotic, amateur trading.
But Elad
Lavi, Executive Vice President of Corporate Development and Strategy at eToro, argues it’s time to ditch that tired narrative for good. Especially since retailers account for an increasingly larger piece of the global assets under management cake each year.
Retail Investors Are Busting
the “Dumb Money” Myth in 2024
eToro has
released an analysis challenging the notion that individual investors are
prone to impulsive and emotionally-driven trading decisions. The company’s
findings suggest that retail investors are becoming increasingly sophisticated
and are playing a growing role in global capital markets, fighting the “dumb
money” myth.
According
to eToro’s data, 74% of its users were profitable in 2024, with that figure
rising to 80% for members of its premium “Club” tier. These results
appear consistent with the platform’s 2023 performance, where 79% of users and
85% of Club members reported profits.
“Technology
has leveled the playing field, and today’s retail investors have access to the
tools and knowledge they need to succeed,” wrote Lavi on the company’s website. “Our
platform shows that users are not just learning about investing, they are
applying that knowledge to successfully meet their long-term financial
goals.”
Not Just the U.S.
The
importance of retail investors in global markets is growing. They accounted for
52% of global assets under management in 2021, a figure expected to rise to
over 61% by 2030. Additionally, younger generations are entering the market
earlier, with Gen Z investors starting at an average age of 19, compared to 32
for Gen X and 35 for Baby Boomers.
But it’s
not just Americans jumping in. Europe, where retail participation has lagged,
is catching up fast. In 2023, just 7% of E.U. adults had stock market exposure,
and in the U.K., it was 20%. Yet experts at Oliver Wyman predict a boom: by
2028, Europe could see 22 million new brokerage accounts, boosting penetration
from 6.8% to 11.7%.
Meanwhile,
a massive generational shift is underway. Gen Z is investing at 19, far younger
than Gen X (32) or Baby Boomers (35), fueled by a staggering $83.5 trillion
wealth transfer expected over the next two decades, per UBS.
What’s Hot in 2024?
The
investment preferences of retail investors also evolved in 2024. On eToro’s
platform, Nvidia displaced Tesla as the most widely held stock, while Advanced
Micro Devices entered the top ten. This shift reflects growing retail interest
in artificial intelligence and semiconductor stocks.
“The
rise of the retail investor is challenging old models of market behavior,” Lavi
added. “Markets now reflect not just fundamentals, but also collective belief.
Retail investors play an increasingly large part in that belief system.”
Beyond U.S.
borders, eToro users are diversifying globally. Names like ASML Holding
(semiconductors), LVMH (luxury goods), and Rolls-Royce (aerospace) dominate the
top ten non-U.S. stocks, showing a sophisticated grasp of industries driving
the future.
In crypto,
eToro’s “HODLERs” stuck to their guns, with little change in the top ten assets
despite altcoin buzz—proof of a steady, buy-and-hold mindset even through
market dips.
A previous study by eToro also revealed, that as many as 69% of retail investors hold cash in their portfolios.
The Future Is Retail
As the
global wealth transfer continues, with an estimated $83.5 trillion in assets
expected to be passed to younger generations over the next two to two and a
half decades, the influence of retail investors on market dynamics is likely to
grow further.
“Understanding
the behavior of retail investors is now vital to understanding how markets
move,” Lavi concluded.
The retail
investor of 2025 is connected, clued-in, and calling the shots. With their
influence only set to grow, one thing’s certain: the “dumb money” label is
officially dead. Welcome to a new era of investing—one where the little guy
isn’t so little anymore.
This post is originally published on FINANCEMAGNATES.
