Bank of Russia carries out survey to profile newbie investor
Typically, a newbie investor residing in a megacity enters the securities market for two main reasons. In the first place, a beginner is interested in this. Moreover, which is no less important, such person is seeking to find a more profitable alternative to a deposit.
Another incentive is the simplicity of investment via a broker’s mobile app often used by newcomers to conclude transactions on their own. Furthermore, over a third of respondents who are actually investors do not consider themselves as such and found it difficult to answer this question.
This is evident from the online survey commissioned by the Bank of Russia and covering the residents of megacities who first put their funds into a brokerage account or a trust management account or purchased an investment product over the last eighteen months.
A beginner investor often opt for Russian companies’ shares, as well as investment funds’ units, foreign shares, and federal government bonds. This structure of investment preferences involves rather high risks as the management of some companies’ shares requires time and special knowledge, whereas a non-professional investor is not always prepared to this.
Nonetheless, the survey shows that newbie investors are aware of risks and generally act prudently, yet often lacking a well calculated plan. Their decisions are often driven by posts on social media and in messengers.
Most newcomers have higher education and upper middle income. Investments are made by both men and women alike. Younger investors slightly prevail, but generally the age structure is close to the normal distribution of the working-age population. Men tend to choose investment funds’ units more often, as well as the highest risk instruments, such as cryptocurrency, over-the-counter derivatives, and forex instruments. Young people are more interested in foreign shares.
The survey outlines four partially overlapping groups of investors, depending on financial products they purchased and their investment behaviour. It should be noted that although newbie investors assert that they are aware of and accept investment risks, nearly a fifth of them are not ready to lose even a portion of invested funds. A fifth of newcomers report that the returns they earned were below their expectations.
Overall, beginner investors are ready to stay in the market and enhance their experience and knowledge without changing their investment intermediaries.