Google Docs compiled the results into a neat spread sheet. I copied all the qualitative / descriptive answers into a word doc, printed them out, and reviewed them by hand. From this I was able to deduce the following:
There appear to be three main reasons why this demographic doesn't invest in the stock market. First, there are obvious money constraints. Many people spoke of "insufficient funds" and "not enough disposable income". Second, - and perhaps more interestingly - many people stated that they don't invest in the stock market due to a lack of knowledge and financial know-how. It is clear that investing in the stock market is a very foreign and intimidating notion to many individuals in this demographic. Many spoke not only of a lack of knowledge regarding which stocks to pick, but also a general lack of understanding of the the entire stock market, the investment process, the nature of stocks and bonds. The third major reason it seems many don't invest is due to the perceived risk associated with investing. This factor is likely closely associated with the former two; however, I decided to include it in its own category because I feel that it illustrates an important sentiment: Many participants equated stock market investing to gambling. There are thus three major barriers to entry into the stock market for this demographic: a financial barrier, an educational barrier, and a perceived risk barrier.
Of those that do invest, there were two main reasons why. First, almost all noted that they enjoyed making money (big surprise). However, more interestingly, a large number of participants affirmed that they enjoyed the uncertainty, risk, and "the feeling of engagement" that investing brings. To many people, investing appears to be a game with risks mitigated by calculations that hope to produce rewards.
When asked what they would change about investing practices, responses converged around four concepts. First, most participants' spoke of the inaccessibility of the stock market. This again highlights a lack of education and knowledge of the stock market (some participants suggested that a basic stock market course be mandatory in highschools). Second, many participants suggested they would lower the financial barriers to entry, citing high transactions costs and large retainers of current online brokers. Third, many users stated that the current user interface design of online brokers is hard to use which makes investing unapproachable and intimidating. Many stated that it is currently very difficult to browse through companies and discover news ones to invest in. Finally, other users spoke of problems with the current investment culture, citing personal concerns with the connotations of stock market investors and the transparency of stock market operations. It is my belief that this sentiment is likely a product of themselves not having invested in the market.
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| Business model canvas. (It's sure to change in the coming weeks) |
When asked if they would be willing to be part of a collective group that invests in stocks together, there appeared to be a 50/50 split. Approximately half of the responses liked the fact that sharing an investment meant sharing the financial risk. the ability to benefit from the knowledge of others was also seen as a large benefit, although responders seemed to indicate that they would only invest alongside others if the "others" had market experience. The other half of participants affirmed that they wouldn't get involved in a collective scheme due to the mobility that is sacrificed. Whether they knew it or not (the question was intentionally open-ended and ambiguous, but was clearly trying to get the idea behind my product) their answers seemed to be suggesting that the benefits of lowering the financial barriers to entry do not outweigh the lack of control one must give up over one's investment.
(Now, this is interesting. My product has to properly balance these two variables. Maintaining adequate control over your investment - even if it is small, and even if it is part of a larger amalgamated investment - is paramount. I suppose this could be partially achieved by ensuring streamlined communication between members within the shared investment.)
Of the responders who were on the fence about joining such a group, most cited that they probably would if they understood more about the stock market. We see that the lack of education is a reoccurring barrier to entry. Of those that said no outright, many seemed unconvinced about the collective intelligence of the group (this could, again, be due to the vague nature of the question). A large number of responders suggested that they "felt uncomfortable relying on others" and didn't want to "discuss investments with other people."
If you haven't guessed it from discussion of my survey, I am seeking to change the way people invest in the stock market. I aim to make it more accessible, social and fun. Ultimately, I feel that the younger demographic lacks a voice in the capital markets, and I want to change that.
More on that to come....
