eToro participated as a contributor to the latest Insight Report from the World Economic Forum (WEF): The Future of Capital Markets: Democratization of Retail Investing. I’m excited to share some of the insights that this report reveals about retail investor participation in global markets.
The report indicates that retail investors are more influential than ever. Growth in retail investing has had ripple effects across the capital markets ecosystem — retail investors are moving markets, influencing institutional investors and having macro effects. From 2021’s meme stock saga to the rise of cryptoassets, they are making their influence felt throughout the global investment landscape.
Retail investors are eager to enter the financial markets and seek learning opportunities. They are taking control of their own financial destiny, whether by choice or necessity. One of the key findings is that individuals can be empowered to make informed financial decisions so that investing will help them to build lasting wealth. Enabling the empowered investor will help spur a responsible investing ecosystem.
Investing is an effective pathway to get people from where they are to where they want to be. It can be an enabler of economic growth, personal security and lasting wealth, and have ripple effects far beyond any one investment. To fully reap the benefits of investing, people must have access to the tools they need and be able to educate themselves throughout their investing journey.
We were encouraged to learn that 70% of retail investors agree with the statement that individual investors have the same opportunities to succeed in the market as professional investors. This concept is not trivial and reflects a significant shift in the public mindset towards investing.
Retail investors do, however, perceive education to be an issue: 74% of retail investors say that they would likely invest more if they had more opportunities to learn about investing and support their investment activities. This gap in retail investor education begins early in their life: most retail investors do not have early exposure to investing principles, contributing to a gap in financial literacy later in life. In addition, it is important to note that despite recent growth in retail investing, a significant part of the global population still does not invest in capital markets.
This is one of the critical areas where we fit in. One of our central goals is to provide the best possible free educational tools and investment insights to help our users understand the markets and make informed investment decisions as well as connect investors to learn from each other.
Today, more than ever, retail investors need a responsible center of knowledge they can trust. An entire generation of investors, particularly millennials and Gen Z, have experienced buoyant markets, but have seen past financial crises at arm’s length. Given the present-day market uncertainty, platforms such as eToro play an important role in maintaining retail investor engagement and trust in the capital markets.
These days, we place special emphasis on enhancing our users’ knowledge of how to act in bear markets, including the opportunities these market conditions present. Diversification is key. We offer stocks, commodities, indices, ETFs, crypto, and more, and encourage use of our copy features which offer an opportunity to learn from experienced investors who are successfully navigating the current markets.
The empowered investor creates a new vision for the future of retail investing. The global capital markets system is at an inflection point and faces several challenges including bringing the vision of an empowered investor to reality. This is an opportunity for the entire capital markets industry to change for the better and I’m proud of our role at eToro in bringing this revolution to life.
Yoni
Yoni Assia is eToro Co-Founder and CEO
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