More people began investing in the stock market, mostly using mobile apps, during the pandemic, a survey showed.
It’s not certain whether the boost in investing was the result of more time on people’s hands due to COVID-19-related lockdowns, or sudden concerns about their financial futures. Whatever the reason, the survey indicates that investment app usage blossomed as the virus spread.
According to a poll of nearly 2000 investment app users by The Penny Hoarder, two out of three (66%), said they started investing during the pandemic, and 67% said the pandemic was the reason they became more serious investors.
“Investment apps shook up the archaic financial landscape by giving people user-friendly platforms to access the stock market with as little as $5,” the survey noted. “Then came the COVID-19 pandemic, which coincided with economic worries, stimulus checks and growing interest in investing apps and cryptocurrency.”
Thus, a perfect environment was created for app use to accelerate, the survey said, particularly among new and young investors.
Apps like Investr, Betterment, Robinhood and Acorns, as well as mobile portals to established stock-trading houses, simplified the investment process for everyday users and bypassed common barriers such as convoluted jargon and high trading fees.
Nearly half of the respondents said they had little to no investment experience before using their mobile app, and nearly half said they started small, with less than $1,000 invested initially.
Perhaps more striking is where the mobile app users said they’re getting investment advice. More than 72% said they would take investment advice from a computer algorithm if the apps offered it. For now, most said they go to the internet and social media sites such as Facebook and YouTube.
Nearly half of the respondents aged 18-to-24 -71% of which said they started investing in 2020-2021 - said they used TikTok for their financial counsel. Two-thirds of those earning more than $150,000 in household income said they were likely to make an investment based on tweets from Tesla founder Elon Musk.
Musk’s tweets roiled the markets several times, particularly when it came to digital currency like Bitcoin and Dogecoin. When the billionaire tweeted that Tesla would no longer accept Bitcoin due to environmental concerns, the digital coin’s value sank almost 15%. At about the same time, he said he was working with Dogecoin to improve its efficiency and its value mushroomed more than 30%.
More than half of The Penny Hoarder survey respondents said they purchased cryptocurrency despite most conceding it was a risky investment. Moreover, advice and endorsements from celebrities were very influential with the investment app users. The 35- to 45-year-old group said a celebrity would be most likely to persuade them to buy crypto. Those ages 18-24 ran a close second.
Not Just The Young
But it’s not only Generation Z and millennials who have the mobile investment app bug. About 67% of respondents ages 45 or older said they started using the apps in the last two years. The survey also indicated that mobile investment app use might not be a passing or pandemic-era, fad.
A majority (60%) said they plan to put more money into investment apps in this year than they did in 2021. And nearly two-thirds (66%) said they intended to try out new investing apps this year.
“Investment apps have carved out their spot in the fintech revolution,” The Penny Hoarder report said. “But are they here to stay? Investors seem to think so.”
Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].