Investing during lockdown: the rise in retail investors in 2021

In the last year, a whole host of factors have coalesced to propel investing rates higher and higher. According to a report by Finder.com, there was a 32% rise in interest in investing compared to 2018. But why is this happening? Why has there been such an uptick in the numbers of retail investors?

Savings rates are poor

As the world went into lockdown last year, so did our spending. The result of this was massively increased saving: the household savings ratio jumped from 6.8 in 2019 to 16.3 in 2020, according to the ONS. Sadly though, interest rates went the opposite direction as the economy shuddered to a standstill. Many accounts dropped to below 1% or courted negative territory, meaning that people wanted to see their cash grow further.

The simplest option was investing – statistics from Finder.com show that 55% of people thought investing was worth it because savings account interest rates were so poor.

Viral hype

Ask anyone and chances are they can tell you a little bit about the January to February 2021 short squeeze of GameStop. As a large group of Redditors turned the tables on hedge funds that had shorted GameStop stock and made a killing in the process, their Robin Hood-like story spread like wildfire, leading to plenty of people wanting to get in on the action.

Not surprisingly, the March 2021 saw some huge increases with the influx of trading and investing. Online trading platform, Tickmill, reported its highest ever monthly trading volume of $195.6 billion notional value in March 2021.

People had plenty of spare time

Stuck at home during successive lockdowns, people had a lot of spare time on their hands. While all sorts of hobbies and interests saw a boost (did we mention banana bread?), plenty of people decided to learn more about investing, as well as running their own accounts.

Apps and platforms

Investing is no longer a paper-based pastime spent flicking through the back of the business papers. As investment businesses have digitised and plenty of new digital competitors have entered the fray, retail investors are spoilt for choice when it comes to choosing a platform and organising their investment options from their smartphones.

The result? Massively increased interest from the public, particularly Millennials and Generation Z – Finder.com survey results found app accessibility was a huge benefit for these two groups.

Prices dropped

As the COVID pandemic exacted its effects on the global economy, the prices of shares dropped precipitously. Those that had hitherto got involved with investing saw this as a prime opportunity to buy while the price was low – in time for big gains when vaccines and lockdown relaxations turned the economy around.

Did you start investing in 2020 or plan on doing so in 2021? Let us know why in the comments.