Australia passes 1 million active investors

Investment Trends research found that as the market became more volatile during the COVID-19 outbreak, Australian retail investors grew by 41 per cent from 750,000 to 1.06 million.

According to Investment Trends research director Recep Peker, the increase in online active traders was primarily down to first-time investors entering a volatile market.

“Australia is now home to over 1 million active online investors who have traded listed investment in the past year, driven largely by a record inflow of 265,000 first-time investors,” Mr Peker said.

The research found that younger Australians are now looking for ways to set up their financial futures.

Australia passes 1 million active investors

“First-time investors typically consist of young Australians in the Zoomer or Millennial age group, but the pandemic-induced lockdown has accelerated these trends. This year, the vast majority of first-time investors are under the age of 40 (70 per cent), which represents a significant shift from last year (51 per cent),” Mr Peker said.

“Falling markets provided buying opportunities presented by the market sell-off earlier this year, while the ability to start investing with small amounts was also a catalyst for many.

“But as the demographics of the industry evolves, there is now great responsibility on online brokers, product manufacturers and thought leaders to help investors navigate this uncertain investing climate.”

Surge in traders on ASIC watchlist

The corporate watchdog has advised investors against day trading, as novice investors try to cash in on changing market conditions.

During ASIC’s focus period: for more two-thirds of the days on which retail investors were net buyers, their share prices declined over the next day. If all retail investors held their positions for only one day, total losses would have amounted to over $230 million.

Stockspot instead advises investors to top up their investment portfolio on a monthly basis and do nothing else.

“As opposed to only buying when markets were down, this group invested regardless of whether the market was up or down.This strategy of constantly topping up, as opposed to trading in and out, allowed them to take advantage of lower prices at the start of the year and outperform the average investor,” the company said.

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About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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