Most Investors Don’t Trade Online

Nearly 15 million adult Americans are involved in online investing activities in one way or another, according to research from Dataquest Inc., a unit of the Gartner Group, but less than 4.5 million actually buy or sell online.

A December 1998 survey of 16,500 households and a follow-up March 1999 survey of more than 550 online bankers and investors found that 12.8 million adults track their investments online and 10.8 million get investment advice and information online.

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Although the level of media attention given to online trading may give the impression that the US is becoming a nation of at-home investors, Dataquest’s research shows that is not the case.

“By our definition, only 8 percent of online investors qualify as ‘heavy’ investors, going online more than 30 times a month to perform investing activities,” said George Barto, senior analyst at Dataquest.

The survey further found that one-third of online investors connect “casually” (1-5 times per month) to do investing activities, and 57 percent connect “regularly” from 6-30 times per month. Only 6 percent of online traders averaged more than an hour a day pursuing trading activities online.

When respondents were asked why they don’t buy or sell stocks online more often, 45 percent said they saw no need, 34 percent said they were concerned about privacy/security issues, and 22 percent said it was too difficult.

“Online investing is still in its infancy, so the general experience level is very low,” Barto said. “There is still a great deal of work to be done in probing the relationship between how long a respondent has been doing online banking or investing and how that affects his or her perception of its difficulty.”

Barto said he expects online trading will mature similar to online banking. Once banks simplified the online banking process, it exploded. At the beginning of 1998, more than half of Americans used some form of online banking, according to Barto.

Data for the survey was generated from an 8-page, 60-item questionnaire completed by more than 550 nationally representative households, which had been identified through an earlier screener as having participated in online banking or investing.

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