We often think about institutional money when we talk about the stock market. However, in the post-pandemic world, retail investors have become more intelligent. In 2021, retail investors actively invested in small-cap funds, index funds, and large caps. The stock market saw a rise from retail investments, making money easier to make than earlier. Financial terminologies like NFTs, DeFi, and SPAC became popular.
Although retail investors contribute small amounts only to the market, their numbers surprised the world in 2020-21. Credit Suisse evaluated that retail investors accounted for around 1/3rd of all trading in the US stock markets in 2021. As the US Federal Reserve shifted policies to decrease liquidity, consensus earnings are predicted to be higher for 2022 than 2021. Therefore, the conditions become favorable for retail investment in the coming year. Many retail investors hired ECM support to identify lucrative stocks and make informed decisions.
The trend is expected to continue in 2022, as retail investors will take over the stock market.
Reasons for a Rise in Retail Investments
Pandemic-Induced Financial Crisis: Retail investments have been on the rise worldwide even before Covid-19. However, the pandemic kicked the young investors forward to the stock markets. Job losses, salary cuts, and a dwindling economic future left people looking for ways to improve their finances. As the US government distributed money among people to stay financially secure during the lockdowns, many considered adding to their finances by trying to trade in the stock markets.
Technological Support: Over the last few years, the internet has reached the remotest corners of the world, opening people up to cheap and easy online access. It improved access to market news and investment education, increasing awareness for different investment forms. Consequently, retail investors from remote cities found new asset classes to diversify their portfolios. Investors from smaller cities and towns will contribute significantly to taking over the stock market in 2022.
Investment Apps: Technical innovation has also brought multiple user-friendly investment apps that retail investors may use to trade in the stock market. Investors now stay connected with the investment community through social media and get the latest news. They hire expert ECM support to gain investment opinions and market analysis to make informed decisions.
Robust Trading Tools: Advancements in technology have empowered retail investors with powerful trading tools. These online tools provide transparency and let them monitor price movements in real-time. They have drastically changed the way stock trading happened in the past when real-time execution was a rarity. They could only access the market through phone calls to market participants and brokers.
Low Interest Rates: Low interest rates on debt instruments and fixed deposits have made stock trading more attractive to retail investors. Those looking for inflation-proof returns are moving towards stock trading, hoping for higher returns.
All these reasons are good enough to let retail investors take over the stock market in 2022. However, retail investors must get ECM support from professionals who help make data-based investment decisions for maximum returns. They provide comprehensive support to retail investors and ECM advisors using data-based solutions and guidance.