Retail investors are everyday individuals who buy and sell stocks through brokerage or retirement savings accounts. Unlike institutional investors, these nonprofessionals trade for themselves with their own money.
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Throughout history, retail investing was often too expensive for many individuals. That’s because investors owed the cost of the trade as well as the commission and fees due to the broker. Charles Schwab revolutionized the retail investing landscape in 2019 when it announced it would slash all fees on stock trading. This quickly prompted other brokerages to follow suit. Read more in this article.
GameStop stock began a meteoric rise in January 2021, rallying from a low of $2.57 to as high as $438. Keith Gill, a financial advisor who posted on social media under usernames including “Roaring Kitty” and helped mobilize the retail investors who drove prices higher. Backing from Chewy founder Ryan Cohen, who is now GameStop CEO, took things up a notch. Dive into the full timeline here.
Holding costs include things like the expense ratio, or the annual fee that a fund issuer charges. Transaction costs include things like brokerage commissions, or the fee that a broker charges to enact a trade. However, in recent years, most brokers have essentially eliminated commissions on ETF trading.
With fees removed from the equation and more time at home thanks to pandemic-related lockdowns, Americans who had never bought or sold stocks before started participating in the market. Charles Schwab dubs this cohort “Generation Investor” and notes individuals from all age ranges took part in this phenomenon. Study up here.
Digital currencies based solely on misspellings of former President Joe Biden’s name have skyrocketed, and backers of a token based on a Shiba Inu wearing a hat raised $690K to get their logo on the Las Vegas Sphere.
Instead of purchasing individual stocks and bonds, new investors may want to start in funds that track an index—like the S&P 500—or that hold a group of themed stocks.
Retail investors may not have the same resources institutional players do, but thanks to the internet, they can access several free tools that provide a leg up. These tools do everything, from recommending portfolio allocations, to helping investors screen stocks, to tracking their real or simulated trades. Learn more about these tools here.
Investors are likely most familiar with ETFs that invest in an index or other grouping of stocks. However, BlackRock breaks down a wide variety of options, including commodity ETFs, currency ETFs, and bond ETFs.
Exchange-traded funds are relatively new inventions, and they’ve grown significantly in popularity during their few decades of existence. They were first created as an alternative to mutual funds. A colorful visualization depicts the entire history of ETFs.
Institutional investors, on the other hand, are investing for someone else. There are big differences between the two, one being that institutional investors can be granted certain special treatment (like being able to purchase IPOs right away).
The United States is home to more than 33 million businesses, the vast majority of which are small businesses, with millions being created (and others closing shop) every year. These businesses often rely on loans, provide the goods and services that keep the economy flowing, and sometimes even grow large enough to enter public markets or provide private investment opportunities. Explore key topics central to business and finance, from the role of the Federal Reserve to how initial public offerings work, how millions of American students finance higher education, and more.