B3 Releases Survey on 2 Million New Investors Who Joined the Exchange Between 2019 and 2020
New investor is young – average 32 years old – invests small amounts – BRL660.00 – has a long-term investment vision, and maintains their positions even at the height of market volatility
São Paulo, December 14, 2020 – B3 released today a study on the profile and behavior of the 2 million+ new investors who joined the Exchange between April 2019 and April 2020. In October this year, the number of accounts at B3 exceeded the 3.2 million mark.
According to the survey, the profile of the new crop of investors is young (average 32 years old), without children (60%), with a monthly income of up to BRL5,000.00 (56%) and full-time employed (62%). Despite the majority of investors (74%) is still made up of men, there is a noticeable increasing number of women (26%) investing in the stock market, jumping from 179,392 in 2018 to 809,533 in 2020.
Following the trend of previous surveys, the amount initially invested by individual investors has fallen. In the last two years, the first investment fell 58%, down from BRL1,916.00 in October 2018 to BRL660.00 in October 2020. Among the younger investors, the amounts were even lower. In October 2020, the average value of the initial investment was BRL225.00 among investors aged 16-25 years old.
The smaller ticket does not translate into less investment diversification. According to the survey, almost half of the investors (46%) began to hold positions in more than one equity product shortly after they started trading at B3. In 2016, for example, 78% of individual investors held only shares in their portfolio. In 2020, that number dropped to 54%, and other products were added to those investors' portfolios.
The ups and downs of the stock market, which is usually associated with the flight of small investors from the Exchange, had less impact on this new crop of investors. Among the investors interviewed for the B3 survey, 64% said they would redeem the amounts invested only if they needed the money. And only 28% of respondents said they would withdraw the money if there was a drop in the profitability of assets. .
“An important legacy for the investor is that stock market volatility is no longer perceived as something bad and scary. As new investors educate themselves and experience greater stock price fluctuations, they learn that volatility is part of the game and can also be an opportunity, depending on their investment strategy. Medium and long-term thinking is already part of the mindset of many people in this new generation of investors. The decision to redeem investments is much more tied to liquidity ('I need the money now for an emergency') than to volatility ('I will redeem the money as the market is down'),” says Felipe Paiva, Director of Customer Relationship - Individual Investors at B3.
To Paiva, financial education and knowledge have played a key role in this behavioral change. “Education and the search for more information about products lead to portfolio diversification and knowledge of investors about their own profile, and increase their appetite for risk. The survey shows that many new investors now maintain their positions and accounts even in the most critical volatility periods and this is not an isolated issue. It is a mindset change that is being disseminated among young Brazilians and, therefore, a generational change is taking place in the way investments are made in Brazil,” explains Paiva.
The power of digital influencers
Part of this investor education journey is thanks to the democratization of access to information. And a good chunk of this information has reached this new generation of investors through the internet and digital influencers on social media.
According to the B3 survey, 73% of respondents obtain information about investments on the internet and 60% via digital influencers.
Although influencers are a priority source of information, among the 60% of respondents who follow influencers on social media only half (32%) say that they make investment decisions based on the influencers’ recommendations.
Most investors (73% of the total surveyed) claim that they make investment decisions on their own, based on conclusions after analyzing data and information from various sources.
Also according to Paiva, “digital transformation brought about by the advancement of technology and greater access to information were critical for the recent growth of the Brazilian investment market. In this scenario, it is essential that people pay increasing attention not only to the quality of the data, but also to the credibility, reputation and history of their sources,” adds the executive.
Universe of the survey
B3’s investor profile and behavior survey takes into account updated data from the B3 equities central depository and data collected through interviews with 1,371 investors from all over Brazil, aged between 18 and 65 years old, from classes A, B and C, who invested in the stock market for the first time between April 2019 and April 2020.
Click here to view the full survey report on the profile and behavior of individual investors at B3 released in December 2020.
Click here to view the survey presentation.
To view the previous survey (May 2020), click here.
Sobre a B3
B3 S.A. (B3SA3) is one of the main financial market infrastructure companies in the world and one of the largest in terms of market capitalization among global leaders in the exchange industry. B3 connects, develops and enables the financial and capital markets and, together with customers and society, boosts Brazil's growth. It trades in stock exchange and OTC environments, and offers products and services to the financing chain.
Headquartered in São Paulo and with offices in London and Shanghai, B3 performs important functions in the market by promoting best practices in corporate governance, risk management and sustainability.
B3. With the market. For the future.