The Growth of Self-Directed Equity Retail Investors in the United States: Insights and Analysis
The landscape of retail investing in the United States has been undergoing a significant transformation, particularly with the rise of self-directed equity investors. This growth has been accelerated by technological advancements and shifting investor preferences, leading to a new era of active and informed traders. This article delves into the current and projected size of the self-directed equity retail investor base in the United States, drawing on comprehensive reports from leading financial research firms.
Introduction to Self-Directed Investors
A self-directed investor, often referred to as an active trader, is an individual who makes investment decisions independently, without the assistance of a financial advisor or broker. These investors rely on their own research, analysis, and judgment to manage their portfolios, and they are often more hands-on and engaged in their investment choices. This segment of the investment market has been experiencing substantial growth, according to recent reports.
Growth of Self-Directed Investors by 2015
A report by Celent, a leading financial research firm, revealed that the number of total US investors is projected to reach 90 million by 2015. Notably, the self-directed investor segment is growing at a faster pace compared to non-self-directed investors. Between 2011 and 2015, the self-directed investor base expanded, constituting 47% of all self-directed US investors, while non-self-directed investors accounted for 53%.
Further substantiating this trend, the same report highlighted that by the end of 2014, active investors would comprise about 43% of the market. Additionally, the number of active traders would account for 6-6.5% of the total market.
Size of the Self-Directed Investor Population
According to a comprehensive research report by Aite Group published in December 2013, nearly a quarter of US adults with access to the internet are retail online traders, with an additional 6% constituting professional traders. Together, this paints a picture of a self-directed US trading population of more than 54 million adults. This figure underscores the significant size and growth of the self-directed investor base in the country.
The report further emphasizes the diverse nature of these investors, indicating that a substantial portion of them are engaged in online trading activities, thereby fostering a more dynamic and tech-savvy investment environment.
Implications for the Retail Investment Market
The growth of the self-directed equity retail investor base in the US has several implications for the retail investment market. Firstly, it suggests a shift towards more independent decision-making among investors, which can impact market dynamics and pricing. Secondly, it highlights the importance of providing accessible and user-friendly trading platforms, educational resources, and tools to support these investors.
Moreover, this trend may lead to increased competition among financial service providers, as firms seek to attract and retain self-directed investors through innovative products and services. This competitive landscape can also drive the development of new investment strategies and technologies that cater to the needs of individual investors.
Conclusion
The rise of self-directed equity retail investors in the United States indicates a profound shift in the investment landscape. As more individuals take charge of their financial futures, the demand for accessible, user-friendly, and informative resources continues to grow. Understanding the size and characteristics of this investor base is crucial for financial service providers, policymakers, and industry stakeholders to navigate this evolving market effectively.