Technological innovation is often driven by pressure. The Covid-19 pandemic has rattled everyone’s cage and has spurred innovation. One major change is the rise of a new generation of investors.
Generation Investor now makes up approximately 25% of the stock market, which is an all-time high. The rise in the number of retail investors has been partially driven by the pressures of the pandemic, but also by the benefits brought by emerging technology.
We have already seen incredible changes afflicting the markets, with trading volume up in 2021, even against 2020’s breakneck pace.
So, how is technology contributing to recent changes in the investment landscape?
1. Accessibility to the Stock Market
The difficulty novice investors have always had is accessing the stock market. Connecting with a traditional brokerage and creating an account usually meant paperwork and providing documentation to verify your identity.
However, apps like Robinhood and Webull have enabled people to sign up within minutes. Investments can be made without speaking to a financial advisor or using a clunky dashboard.
Breaking down barriers to entry through innovative investing apps has meant tens of thousands of investors entering the stock market during the pandemic for the first time.
2. Widening Equality in the Markets
One of the most common barriers to investing in stock was account minimums. Most traditional brokerages demand a minimum opening deposit of between USD$1,000 and USD$5,000. For millennials and Generation Z’ers, this is a huge hurdle to overcome.
Modern investment platforms now support investing with minimal funds. Some even allow you to invest with just a few dollars.
The increasing prominence of fractional shares means you no longer need a four-figure sum to buy into Apple or Amazon. You can do it with nothing more than pocket change.
On a side note, widening access to investing is likely to be especially beneficial not only for low-income Americans but also for developing countries around the world.
3. Better Screening with Artificial Intelligence (AI)
The biggest revelation in investing was the rollout of AI across global investment research platforms. AI has been with us for quite some time, but its use was limited.
In recent years, AI has become more readily available to the average investor. Platforms like Atom Finance are now providing access to institutional investment data, thus allowing traders to make more informed decisions.
One such platform that utilizes AI is Trade-Ideas. Investors using this platform can deep dive into any investment and gain advanced insights into every aspect of a stock, a market, and businesses themselves.
You can check out this review on Trade Ideas to find out more.
Investors should expect AI to become more powerful and more useful in the years ahead. This is a technological innovation that’s here to stay.
4. Faster, More Powerful Charting and Trading Platforms
While much of the focus is on AI and machine learning, charting and trading platforms have grown more powerful as technology has improved.
This is critical for short-term traders who need the fastest information and minimal trading slippage. It’s impossible to follow day trading principles without a setup that provides the necessary support.
Now, investors can get data in real-time and finally compete with the big investment firms on Wall Street.
The edge large investment firms once had is quickly slipping away to leave a more even playing field.
5. Automated Investing
Like other industries, automation is becoming a mainstay of modern-day investing. The pandemic has encouraged new challengers to innovate to help investors and offer a superior product.
Automated investing follows the markets 24/7 and makes changes according to parameters set in place by the client.
For example, many robo-advisors will come with automatic portfolio realignments. When the market changes, no manual input is required to maintain the desired investment allocations of the account holder.
Automation allows investors to focus less on making micro-adjustments as the market changes and more on their broad strategies.
It’s a true game-changer and essentially allows people to leave their portfolios on autopilot.
6. Classic Investment Strategies Remain
Despite the incredible changes new technologies are introducing to the world of investing, novices can’t utilize technology to cover up their deficiencies.
Technology is designed to help not to instantly make you money. Classical investment strategies and principles, such as risk management, a diverse portfolio, and long-term holding, will remain the key to success in the years to come.
The financial world tends to be set in its ways and is among the slowest industries when it comes to embracing new technology. Compared to five years ago, or even 18 months ago, the current landscape is unrecognizable.
There has never been a better time to jump into investing while leveraging these emerging technologies.
Although we cannot see the future, what we do know is that these technologies are only going to get faster, more accurate, and more powerful.