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DGAP-News: Trade Republic Bank GmbH
/ Key word(s): Study/Study results
Trade Republic Bank GmbH: WORLD'S LARGEST STUDY ON RETAIL INVESTOR BEHAVIOR PROVIDED BY THE GERMAN INSTITUTE FOR ECONOMIC RESEARCH DIW ECON
10.02.2022 / 10:00
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| WORLD'S LARGEST STUDY ON RETAIL INVESTOR BEHAVIOR PROVIDED BY THE GERMAN INSTITUTE FOR ECONOMIC RESEARCH DIW ECON: A NEW GENERATION OF INVESTORS THAT SAVES LONG-TERM, DIVERSIFIED AND SUCCESSFULLY |
- Largest survey-based study globally on investment motives and behavior with over 200,000 participants commissioned by Trade Republic
- Almost half of respondents are novice investors, allocating 37 percent of their total private wealth into capital markets
- More than 70 percent of respondents invest to make a long-term contribution to their retirement plan
- Users invest in diversified products. 85 percent of assets are invested in stocks and ETFs. Derivatives account for only two percent
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BERLIN, February 10th, 2022 - Who uses neobrokers? What motivates investors today? And how do they invest? These questions have been researched by the German Institute for Economic Research Econ (DIW Econ) in their new study "Hype or New Normal? Insights into the motives and behavior of a new generation of investors". The institute studied the responses of over 200,000 Trade Republic users and analyzed their actual investment data. The result: the world's largest survey-based and representative study on the behavior of private investors. The study shows that a new generation of investors has emerged that invests in the capital market to make long-term contributions to wealth accumulation and retirement planning.
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"It is a central question how young people react to the current situation on the capital markets and negative interest rates. Our research shows that a new generation of first-time investors has emerged that invests a significant share of their private wealth in the capital market. This generation invests in diversified products and with long term motives. It is particularly remarkable that a lot of young people are introduced to long-term saving and investing, among them also first-time investors," says Prof. Dr. Alexander Kritikos, economist and Senior Research Associate at DIW Econ. "This comprehensive study presents, for the first time, insights into the needs, objectives, and motives of a new generation of investors."
The study was conducted in summer 2021. Trade Republic provided the DIW Econ with full access to users' anonymized investment data. On top of that, a 15-minute-survey was sent to all customers, which was answered by more than 200,000 users. This resulted in the largest dataset on investment motives and behavior of private investors globally. The study was commissioned by Trade Republic in order to independently and scientifically investigate why and how people invest their money digitally today.
"The analysis of the independent and renowned research institute DIW Econ shows how urgent the problem of the pension gap is for many young people who invest a significant share of their private wealth in the capital market. It further shows clearly that these people are saving independently, well informed and especially for the long-term," says Christian Hecker, co-founder of Trade Republic. "With this study, we hope to contribute to the public debate. It's often claimed that especially young people invest their money blindly, with a high risk of losing it. The data collected in this study counters this thesis very clearly."
One of the most important results of the study is that a new generation of investors is emerging: 47 percent of respondents state that they are investing in the capital market for the first time. It is not surprising that this new generation of investors is younger: Around 70 percent of novice investors are under 35 years.
A key part of the analysis was to understand investors' motives for their investments in the capital market:
- 72 percent of users invest to make a long-term contribution to their retirement plan.
- 77 percent of users invest because there is no other lucrative alternative to save.
These statements are supported by their portfolio structure:
- Around 85 percent of capital assets are invested in stocks and ETFs. For novice investors it's almost 90 percent.
- Derivatives, which are riskier than equities and ETFs due to leverage, account for only 2 percent of portfolios. For novice investors, the number is even lower at only 1.2 percent.
Novice investors thus invest more often in diversified and less risky products. This is also supported by the results of the user survey, in which novice investors state that they are less willing to take on increased risk for higher returns when compared to more experienced investors. In fact, more than 19 percent of experienced investors claim to have a high risk tolerance, while less than 11 percent of novice investors do so.
This investment behavior results in sustainable returns. The median annualized return of surveyed Trade Republic users between January 2019 and April 2021 was more than 7 percent. And there were learning effects: The median annualized return increases to more than 11 percent for users who have invested for more than twelve months with Trade Republic.
The study is available to everyone via this .
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Bettina Fries
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| ABOUT TRADE REPUBLIC: |
| Trade Republic is a European savings platform that enables people to save, invest or trade on the capital market with just three taps and for only one Euro per trade. In addition to the intuitive app, a web version is also available to customers for this purpose. Trade Republic's vision is that everyone should have the opportunity to take their investments into their own hands. Trade Republic is a bank licensed in Germany and supervised by the Bundesbank and BaFin. The company was founded in 2015 by Christian Hecker, Thomas Pischke and Marco Cancellieri and today reaches over 250 million people in six European countries. Trade Republic's investors include VCs Sequoia, TCV, Thrive Capital, Accel, Creandum, Founders Fund and Project A, as well as sino AG. |
10.02.2022 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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