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Young Adults, Minorities Lean on Social Media for Investing

Social Media

Technology and social media have changed what investing looks like for the public, particularly for younger people, lower-income individuals and people of color. 

According to the results of a new CNBC survey, social media is the most popular way that young investors research investment ideas. The CNBC/Momentive Poll conducted in August 2021 found that 37% of those age 18-34 use social media as one of their key ways to research investment ideas, compared with only 17% of those aged 35-64 and 5% of those aged 65 or older. Older investors were found to rely more on discussions with their broker or financial advisor, with 52% of those aged 65 or older saying so, compared to only 15% of 18-to-34-year-olds and 27% of 35-to-64-year-olds. 

Additionally, 12% of young investors (18-34 years old) learned how to invest from social media, compared with just 3% of those 35-64 years old and 1% of those age 65 or older. Investors of color were also found to use social media to learn about investment ideas more than white investors (29% of blacks, 34% of Hispanics and 14% of whites). White Americans prefer to speak with their broker (35% of whites, 17% of blacks and 16% of Hispanics). 

The survey found overall that 28% of investors who earn less than $50,000 use social media for investment advice, while 51% of those who earn more than $100,000 use financial websites.

Younger investors were also found to prefer making trades using a mobile app. According to the findings, more than half (57%) of young investors use a mobile app to conduct trades (57% of those 18-34, 32% of those 34-64, and 5% of those 65 or older), while older Americans prefer to call their broker to make trades (15% of those 18-34, 34% of those 35-64, and 60% of those 65 or older). 

Similarly, more than three times as many new investors use a self-service mobile app than experienced investors. Here, the findings show that 63% of those who began investing in 2020 or later use a self-service mobile app, compared to only 20% of those who began investing before 2019.

Investor Behavior

Younger adults are also increasingly getting in the game of investing. While 26% of the general public began investing in 2020 and later, 60% of young investors (18-34) began investing last year or later, while the same could be said for 21% of those age 34-64 and 4% of those age 65 or older. 

Two-thirds of investors primarily began to invest to “plan for the future,” and 70% continue to invest based on the potential for “stable growth in the long term.” Many more older investors than young investors say they are investing for stable growth in the long term (59% of those 18-34, 70% of those 35-64, and 79% of those 65 or older). 

Asked why they began investing, new investors cited four reasons: 

  • friends and family encouraged them to (19%); 
  • they recently learned how (16%); 
  • they received extra money from the pandemic (10%); and 
  • because of the growth of cryptocurrency (10%).

Additionally, more people of color began investing in 2020 or later, according to the findings, which show that 20% of white men, 19% of white women, 44% of black men, 47% of black women, 41% of Hispanic men and 41% of Hispanic women began investing in the past 18 months. 

The CNBC/Momentive Poll was conducted online from Aug. 4–11, 2021, using a national sample of 5,530 adults. Data were weighted for age, race, sex, education and geography.