Welcome back and Happy New Year from everyone at Yielders. We are excited to bring you a new and refreshed set of blogs as we venture into 2021. We’ll be posting them regularly across our social media, as well as offering up some exclusive content for our users through other channels. This week, we’ll be covering the changing nature of the investment market, and the differing options available to the conscientious everyday investor.
What Exactly is a Retail Investor?
Nasdaq, a US-based financial data provider, defines a retail investors as ‘small individual investors who commit capital for their personal account rather than on behalf of another company.’ In short, they’re investing for themselves, and they’re investing smaller amounts. The threshold at which an individual is classified as a certain type of investor can differ slightly across jurisdictions sectors and firms. Here at Yielders, we like to keep things simple:
|Investor Classification||Investment Amount|
|Retail/ Everyday||£100 to £20,000|
|Sophisticated||£20,000 to £40,000|
|High Net Worth/ Top Yielder||£40,000+|
If you’ve visited the platform, you may have seen that certain investment opportunities are reserved for Top Yielders and Sophisticated investors. This is because there are important rules regarding the investment types we can offer to certain investors based on investment risk and financial circumstances.
Why Has Retail Investing Suddenly Come Into Focus?
Last year saw a true boom for investment at all levels, not least for retail users, the demographic now for the first time considered among the major market players, alongside institutions and others. Last year’s economic conditions comprising of a volatility-inducing pandemic, a bullish (confident) market and extensive macroeconomic stimulus measures can be seen as the driving force behind the enfranchisement of millions of new retail investors.
The evidence suggests that the new generation of retail investor is both younger and more conscientious, with access driven by the explosion of mobile and app-based investment platforms. With, according to market maker Citadel Securities, an investment volume of 20-25% of all overall market activity, retail investors have found themselves thrust into a market-moving position.
What Are Retail Investors Investing In?
IR Magazine points out that ‘novice investors tend to gravitate to products and services familiar to them’, while neglecting ‘attention to earnings announcements, SEC filings, research reports and other official sources of information.’ You will undoubtedly have seen the stunning record of successes for companies like Tesla and alternative investments such as Bitcoin, part of which can be attributed to a ‘bandwagoning’ effect especially among younger retail investors.
That said, retail investors aren’t all short-term traders, with many looking to the long term to achieve their financial goals, preferring a less volatile source for their hard-earned funds. Products such as Exchange Traded Funds (ETFs) and Real Estate Investment Trusts (REITs) track the performance of a group of underlying assets, often offering opportunities for diversification. A new trend emerging is that of the ‘thematic’ ETF, whereby with one investment, an investor can gain exposure to a number of different companies in a certain industry, e.g. ‘US Healthcare’.
At Yielders, we try to keep our real estate-based retail product both simple and competitive*. You can set up an account in minutes, and access our range of investment opportunities starting from £100. Dividends are paid out monthly to your secure user e-wallet, which you can withdraw to your registered bank account at any time.
Controversies Around Retail Investing
As of late, a number of platforms have been accused of ‘gamifying’ investing to appeal to retail investors paying less deference to the technical and fundamental details of investing. There have been cases of inexperienced users losing significant amounts of money using highly leveraged products to try to generate upside, without a comprehensive understanding of the downside risks. In short, inadequate information about the risks of investing in a certain product is leading to harmful consequences for those newer to investing.
Here at Yielders, we take investor education very seriously, with transparency and risk mitigation at the heart of everything we do. We encourage investors to undertake as much due diligence about our ethical investment opportunities as possible, and to reach out to us if anything is unclear; our team is always happy to explain things in an objective manner, so you can decide if a Yielders opportunity is right for you. We also offer resources such as a knowledge centre with information on FAQs, as well as our blog, which covers relevant themes related to the industry in which we operate. For any questions you might have right now, feel free to reach out to us through the chat function on the website.
*as with any investment, your capital is at risk when investing with Yielders. Returns stated on yielders.co.uk are projections only and may deviate.