A survey released by The BlackRock Foundation and Commonwealth reveals that over 54% of Americans living on low and moderate incomes (individuals from households living on low and moderate incomes ranging from $30,000 – $79,999 annually) are currently retail investors in the capital markets. Among this group, over half are new investors who started investing within the last 5 years.
These research study findings underscore the democratization of retail investing and highlight the expanded reach of the capital markets, which is a “key driver of household financial security.”
Earlier, The BlackRock Foundation, a private charitable foundation established by BlackRock, and Commonwealth, a national nonprofit dedicated to building financial security and opportunity, launched The Investor Diaries, a research initiative to “better understand and support investors living on low and moderate incomes.”
Now, the groups released a cornerstone of that effort: the results of a survey exploring who these new investors are, what’s “driving them to invest, and what they may need to build long-term wealth.”
BlackRock and Commonwealth claim to share a belief in the power of capital markets to enable financial well-being. BlackRock Chair and CEO Larry Fink writes about how the democratization of investing can “help expand prosperity in more places, for more people.”
The BlackRock Foundation’s mission is to help consumers living on low and moderate incomes earn, save and invest – “earlier, more often and for their futures.”
The data offers a look at investors living on low and moderate incomes who have entered the capital markets since 2020.
The insights from this survey, along with the broader Investor Diaries initiative, can guide product design, outreach strategies, and investor education programs, to “support this demographic of investors who have recently entered and/or are already engaged in the capital markets.”
Over one-third (37%) of investors living on low and moderate incomes who have entered the capital markets in the last five years “plan to invest long-term, for at least 11 more years. 80% of this cohort plans to continue investing for at least three years or more.”
Newer investors are primarily driven by “long-term goals.”
When asked to identify their current investment goals, of which they could select more than one, the “most chosen goals were: retirement (37%), money for the future (35%), reducing financial stress (27%), and more money for their children/family (27%).”
Notably, 79% of newer investors are both “investing in retail markets and saving for retirement.”
More than a third (35%) of respondents reported having “paused investing at some point.”
The primary reason cited for those who paused and restarted was “not feeling financially secure enough to continue” (33%).
Having to sell investments due to an emergency expense was said to be the main issue ranked among those who noted they were “unable to overcome a challenge—underscoring the benefit of emergency savings as a foundation for investing.”
Uncertainty about what to invest in is said to be the main reported challenge for respondents who are “newer investors.”
Other reported challenges for this new cohort included “concerns about risk, slow portfolio growth, and balancing investing with monthly and emergency expenses.”
Individual stocks are said to be the most commonly held asset (69%) by newer investors. 34% of newer investors hold ETFs and 34% have mutual funds. This distribution highlights an “opportunity to strengthen investor education on diversification practices.”
Among the relatively newer investors, the most common sources for learning about investing were “video sharing sites (36%) and social media (35%).”
And 90% of current investors know one or more people in their social circle who also invest, “compared to 64% of non-investors—highlighting the importance of community influence.”
One in five newer investors (20%) stated that they are “not currently investing for retirement, with 17% of those citing the lack of an employer-sponsored plan as the main reason.”
This highlights the need to further expand access to retirement benefits—especially for workers in “low-to-moderate income households—so more people can build long-term financial security.”
The recent increase in participation among investors living on low and moderate incomes marks an opportunity. Millions who did not previously participate in financial markets have “stepped in—and they’re doing so with long-term goals in mind.”
Yet, many tend to face persistent barriers, such as a lack of short-term liquid savings, uncertainty about “what to invest in, and limited access to trusted educational resources.”
To sustain this momentum and ensure more US consumers are able to build lasting wealth, it’s vital to equip investors with the tools, resources, and support to expand opportunities for upcoming generations.
This survey, which looked at retail investments outside of tax-advantaged retirement accounts, was carried out in January of this year with a nationally representative sample of over 2,750 respondents, all of which are individuals from “households living on low and moderate incomes ranging from $30,000 – $79,999 annually.”
Respondents include those who are “currently investing in capital markets and non-investors.”
Of those who are currently investing, Commonwealth examined and compared the “motivations and behaviors of investors who entered capital markets pre- and post- pandemic, as well as non-investors who have never invested, have previously invested, and those who have no investing experience.”
The primary focus of the survey results is those “that entered the market since 2020.”