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Social media is the most popular outlet for investment research for young retail investors, according to a new study conducted by CNBC.
According to the study, 35% of investors aged 18-34 say they get investment ideas from social media, compared with 15% of investors age 35-64. Out of all outlets for investment advice, young traders selected social media the most, with smaller numbers of investors selecting "friends and family," financial guidance websites, and news media.
The survey also reveals that many young adults began investing in 2020 and 2021 as the pandemic sent people to their homes with more free time. Three-fifths of the young retail investors surveyed said they began investing in 2020 or 2021.
When asked why they started investing, 12% said because it "feels like a game." 27% said "it's exciting," and 24% said it's easy to do on their own.
The gamification of investing and particularly trading app Robinhood's role in the phenomenon has drawn scrutiny from regulators and lawmakers for several years. Some investors are worried that the app's easy-to-use interface may spark panic selling if the market sees a drawdown. Others are nervous that the app is leading new investors to trade too much, a practice that typically results in losses over the long-term.
Robinhood estimates that close to 50% all new retail funded accounts opened in the US from 2016 to 2021 were new accounts created on its platform, suggesting the app has a large role in ushering in a new generation of investors.
While the survey didn't specify which apps young investors use, it found that 57% of investors aged 18-34 use a self-service mobile app to buy and sell investments.
CNBC conducted the survey in partnership with Momentive, a software company formerly known as SurveyMonkey. The poll was conducted online between August 4-9, 2021 among a national sample of 5,530 adults. Respondents for this survey were selected from the more than 2 million people who take surveys on the Momentive platform each day. Data was weighted for age, age, race, sex, education, and geography using the Census Bureau's American Community Survey to reflect the demographic composition of the United States age 18 and over.
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