Retail Investors Show Conservative Shift in 2024, New tastytrade Report Reveals

The study also shows 64% of Americans hold stocks, while 57% of women started investing in the last four years

While most Americans remain cautious in their approach to investing, stocks remain the most popular vehicle. Some 43% of retail investors choose them as their first investment, and 64% are currently holding them, according to a new retail investor sentiment report commissioned by tastytrade with Finder—a global fintech company that helps consumers make better financial decisions. 

The study, which surveyed 2,016 adults in August, found that while participation in investing is growing, only 43% of Americans have invested outside of their 401(k) plans. This participation shows significant demographic variations, with men 48% more likely to invest than women (54% vs. 36%). Income plays a crucial role—67% of those earning more than $100,000 annually invest outside their 401(k)s, compared to just 38% of those earning less. 

For new investors, cryptocurrencies are increasingly popular (9%) but still trailing stocks (43%) and mutual funds (12%). But long-term investors aren’t as likely to invest in crypto or don’t consider it a long-term asset. Respondents who reported crypto holdings typically had only small amounts, with 28% reporting less than $500 in crypto. 

The highest rate of investment participation are among those aged 35-44 (53%), followed closely by the 25-34 group (51%) and 18-24 (50%). Participation notably declines with age, dropping to just 33% for those over 65. 

Over half (52%) of surveyed investors have started within the last four years. Women were particularly active during this period, with 57% beginning their investment journey in the last four years, compared to 47% of men. 

The survey highlights an opportunity to inform those not currently investing about how easy it can be to get started. Those who aren’t investing say that financial constraints remain the primary barrier, with 69% citing lack of funds as their main reason. However, while the cost to open a brokerage account varies among firms and by the type of account, it can be as little as $0 at most companies.  

Gaps in knowledge also play a role, with 30% reporting they don’t know what to invest in. Many brokerages provide educational content, starting with investing and trading basics, that can help newbies learn from scratch. Indeed, an important revelation is that most respondents who do trade noted they aren’t doing a ton of background research before diving into investing—almost a third of these respondents started by opening a brokerage account and learning from there.  

Investment motivations/strategies 

Preparing for retirement (48%) and working toward financial independence (42%) are the top motivators for those starting to invest. This could be linked to the recent popularity of the Financial Independence, Retire Early (FIRE) movement—which prioritizes intense budgeting, saving and investing to reach retirement before the typical retirement ages of 65-70.  

Gender differences emerge in investment goals, with men more focused on beating inflation (37% vs. 27%) and generating additional income (45% vs. 33%). Women are more likely to invest for healthcare costs (18% vs. 15%) and are influenced more by family members (34% vs. 21%).  

Risk tolerance shows a decidedly conservative bent, with 69% of investors leaning toward conservative strategies. Women display even more caution, with 75% favoring moderate approaches, compared to 63% of men. 

Current market sentiment  

Seventy-five percent of respondents believe it's a good time to buy stocks because value investing remains popular, well ahead of earnings or company news.  

There’s a lot of investment in commodities, and almost 20% of respondents reported they had committed between $20,000-$50,000 to the sector—many of them likely driven by the high price of gold.  

Forex trading faces significant skepticism, with 69% viewing it negatively. Some 40% of respondents noted they invest in energy, well ahead of tech.  

Overall investor sentiment is cooling, with 44% investing more conservatively than six months ago, while 11% report more aggressive investment strategies. 

The shift toward conservative investing is primarily driven by concern about inflation, recession, geopolitical conflicts and uncertainty about the elections. 

Regional differences also emerged, with the Mountain region (including states like Colorado and Nevada) showing the highest investment participation at 51%, while the West North Central region (including states like Iowa and Minnesota) reported the lowest at 33%. 

View the whole report here.  

Kendall Polidori is a Luckbox magazine managing editor.