Why small investors are piling into share-trading apps

Why small investors are piling into share-trading apps

With time on XO her hands, 25 year-old Londoner Andreea Ion joined two stock-trading websites at the start of the Coronavirus pandemic.

"My boyfriend and I were caught in this really small London flat, and just thinking we have to do something, or we're going to go crazy here," she recalls.

Over the last year, younger investors like Miss Ion have flooded online share-trading platforms, including eToro, Freetrade, and Robinhood.

She and her boyfriend Jamie now post together on Instagram about their investing.

"We're witnessing an era where everyone can just start investing, and accumulating wealth from their phones with nearly zero fees for a transaction," says Miss Ion, who lived in Romania until she was 18 and recently completed a master's course at Cambridge University.

But is this wave of new investors a good thing?

Adam Dodds, chief executive of Freetrade argues that involvement in share trading is good for participants: "I compare it to eating healthy, or working out. It's a healthy habit", says Mr Dodds.

It's certainly been good for his business.

Freetrade's registered customers grew six-fold in 2020, jumping from 50,000 in January to more than 300,000 in December, and up to 700,000 now.

Nearly 60% of them describe themselves as first-time investors, and their average age is 31. Women now make up one in four of the platform's investors, up from 13% a year ago.

And it's not just Freetrade. Other platforms have seen a surge in new customers. During 2020, Robinhood added 3 million users, a rise of 30% and eToro added another 5 million - a near 40% gain.