Online Investors Number 5 Million

The number of online investors in the US increased by 2.2 million in 1998, according to research by NFO Interactive. NFO reports more than 5.2 million Americans now invest online.

“The online investing market has grown quickly due to many compounding factors,” said Lee Smith, NFO Vice President of Marketing and Business Development. “Overall, the number of online households grew from nearly 26 million to more than 33 million during 1998. Concurrently, the percentage of online investors also increased from 11 to 16 percent. Clearly, the online brokerage industry is experiencing multidimensional growth.”

According to research by Piper Jaffray, the online brokerage industry as a whole accumulated 3.6 million accounts in 1998 to conclude the year with 7.3 million accounts. These accounts represent approximately 4.4 million individual investors, Piper Jaffray said.

NFO has also found that average trading levels among online investors increased by 18 percent. During the same period, online households that do not invest online, decreased their average trading levels by 49 percent.

“With online investors conducting nearly 88 percent of their transactions via the online channel, the online investing industry is well positioned for significant growth,” Smith said. “While a portion of the online trading levels represent new activity, much comes at the expense of traditional investing firms.”

Forty-eight percent of the online investors interviewed said their online investing resulted in lower activity levels with their full-service companies. Similarly, 38 percent of all online investors indicated lower discount firm activity levels for the same reason.

“With nearly 55 percent of all online investors believing their dependence on a full-service or discount investing company will decrease, additional structural changes within the investing industry are imminent,” Smith said. “Many more companies will be forced to consider online investing as an integral component of their business strategy.”

The NFO study, “Online Brokerage Market: Consumers, Web Sites & Competition, Second Edition” was conducted in December, 1998, among 1,547 online households–including 767 online investors.

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