May 2024

Access to financial markets can have a material impact on the financial health trajectory of families and individuals seeking to build wealth. In aggregate and over the long run, financial assets have offered solid returns in exchange for accepting market volatility. Alongside a decline in the cost of retail investing in recent years, financial market investment has broadened from an activity dominated by higher-income individuals to one with a much broader base.¹ Market commentators and other researchers have cited increased access to information, reduction in trading commissions, and social media networks as contributing to the demographic trends.²

This report provides a more comprehensive view of the recent broadening of retail investing by characterizing activity by age, gender, and race. Demographic attributes may correlate income growth and liquidity—two features of financial flexibility that predict investing transactions.³ Each of the population subgroups we study increased their transfers to investment accounts out of their take-home income as of 2023 compared to pre-pandemic levels, and each group experienced a peak during the pandemic-era savings boom.

Higher frequency investing dynamics reveal sharp differences in behavior among certain groups during the pandemic. Transfers from checking accounts to investment accounts of younger individuals and men increased more aggressively around the historic March 2020 volatility in stocks and during a stimulus-driven investing fad in early 2021. In recent U.S. business cycles, men and younger individuals have been disproportionately exposed to economic risk through their labor earnings, according to academic research.⁴The relative increase in exposure to financial market risk of the same groups may amplify negative outcomes in the case of prolonged downturns in markets and the economy. Future crises may feature analogous investing behavior, and a sharp rebound—as experienced in the wake of the pandemic—is not guaranteed.

We base our analysis on a sample of over 10 million active checking account users spanning 2008 to 2023. We use transfers from checking accounts to external investment accounts to identify investing transactions.⁵ Taking differences by age, gender, and race⁶ in turn, we find the following:

Finding 1. The monthly share of individuals below 40 years old transferring funds to investments has more than tripled over the past decade, outstripping increases for those 40 and over.

Finding 2. Peaks in market volatility in 2020 and a fiscal stimulus-fueled investing surge in early 2021 were associated with a temporary increase in the share of investment transfers for men.

Finding 3. The share of Black and Hispanic individuals transferring money to investment accounts increased relative to White individuals over the past decade and peaked around the timing of pandemic-era fiscal stimulus.

Decisions to participate in financial investments involve a range of factors that may correlate with the demographic groups considered. Having the financial flexibility to generate savings is essential, as indicated by the roles of income growth and liquidity highlighted in the prior Institute report.

Decision makers and industry practitioners can use this report’s findings to gauge the evolving population investing through brokerage accounts and consider the results in understanding the needs and recent behaviors of investors, particularly new entrants to the market.

The changing demographics of retail investors