First-time investors are cautious, diligent and purposeful, trading app Freetrade has revealed.
A survey of 1,129 active investors by Freetrade found that new users have not started investing due to lockdown boredom and are instead in it for the long-term.
Only 4.9 per cent said “lockdown boredom” was the sole reason for starting to invest and only 23 per cent cited this as one of many contributing factors.
Amongst the most common reasons given for starting investing, new investors said that they were trying to achieve peace of mind (38 per cent), they want to boost their income (47 per cent), and they want to save for a property (35 per cent).
These are much more common than shorter-term goals, such as saving for a major one-off purchase (14 per cent) or holiday (nine per cent).
Instead, 81 per cent of new investors have turned investing into something they do at ‘least once every few months’, with only 14 per cent reporting doing it every week and almost half of all investors (45 per cent) are investing monthly.
Whereas 91 per cent of respondents said that they lacked confidence before investing, more than three quarters said they now feel confident, energised or interested in investing and money after they got started.
Of that number, about 45 per cent held a portfolio valued up to £1,000, suggesting that one of the main ways for people to build confidence in investing is to practice and build habits with small sums of money first.
Younger people, those aged 35 and under, are more likely to invest with a clear goal in mind, with the most popular being to support their income (51 per cent) and buy a property (43 per cent).
“These findings suggest that the buzz around investing is not a fad,” said Adam Dodds, chief executive of Freetrade.
“Millions of people are getting into investing for the right reasons and picking up an important, life-long habit which should be nurtured and celebrated.
“While we have seen a number of stereotypes about new and inexperienced investors taking hold in the last 12 months, our research shows, by contrast, that their behaviour is much more conservative.
“What we do need to worry about is the behaviour of platforms. We’ve seen genuine, positive momentum build in the DIY investing space this year.
“It would be a shame if retail investors ended up getting shouldered with heavy losses because they were encouraged to dabble with complex, leveraged derivatives.
“Rather than scrutinising the behaviour of a small segment of new investors online, we should focus on the dubious practices of platforms that are acting against their customers’ best interests.”