Last Year’s New Investors Plan to Buy Even More Stocks in 2022
January 19, 2022
Last year saw a surge of first-time investors enter the stock market, fueled by meme stock mania and commission-free trading platforms. According to one survey, they plan to put even more money into the stock market this year, despite expectations from Wall Street that this year will see lower returns.
The survey, conducted by Investing.com, found that 86% of investors who started investing last year plan to increase their stock holdings in 2022, despite performing worse last year than their more experienced counterparts. Among investors who started last year, just 67% said they made a profit, compared to the 87% of more experienced investors who saw a profit last year.
New investors are also more optimistic, with 84% saying they expect their stocks to rise in value this year. Among more season investors, 75% expect the same. Last year’s stellar returns may also be setting up unrealistic expectations. The S&P 500 ended the year with a gain of nearly 27%, far above its historical average of roughly 10%.
While no one can predict where the markets will go, the broad consensus is that we are unlikely to see a repeat performance in 2022. Between the Federal Reserve’s monetary tightening and slowing economic momentum, 2022 is poised to be a more volatile year, and it remains to be seen how these new investors, who may not have a clear understanding of their own risk tolerance, will be able to navigate a large downturn in the stock market.