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When it comes to the future of investing, trying to work out which stocks will be valuable can be like asking for an answer from a crystal ball; we can all make a ‘best guess’ but there’s never an absolute answer.
Thankfully, our ability to make a ‘best guess’ has developed considerably as the methods that we use to predict outcomes have improved, how we invest has advanced and, interestingly, the investors themselves have changed the process.
Smarter, Faster Platforms
Some of the world’s most popular platforms are those able to offer the best-in-class features. Digitisation is at a point where accessibility and customisation of platforms are at the cutting edge of financial services. However, with the influx of retail investors, the best expectation may be that the top performers will be those offering significant choices in asset classes and sizes. In truth, some of the best today are defined by their ability to offer a lot for a reasonable platform fee.
A Capital.com review noted that with over 6,000 assets (in their case Contract For Differences (CFDs)) on offer, the platform has drawn in almost 6 million users. In five years, these larger players likely continue to build on their progress by continuing to deepen their asset offerings. Newcomers are rare in such a crowded space. We’d never rule them out entirely, but the likelihood is that we see large platforms keep getting better, and attracting more first-time and casual investors.
New Asset Classes
It’s always important to temper expectations with certain assets, especially if they’re far from commercialisation and adoption. However, there are several assets in the market today that look like they’ll become a lot more commonplace in the future. Top of that list is cryptocurrency and the metaverse. These two advancements are growing rapidly in popularity both individually and as a joint concept as detailed by coindesk.com but are still somewhat outsiders in the space. People are becoming increasingly at ease with digital, or at-home socialising, spending and working, which could contribute to metaverse industries and assets being commonplace.
Crypto is breaking into a much more crowded and complex market. Its lack of centralisation, security features, and gradual expansion to be accepted as a payment form are all going to be very helpful for these exciting new types of investment opportunities.
More Newcomers
Retail investors made up a huge proportion of investors in the last few years. In the first half of 2021, 10 million new brokerage accounts have been opened and as reuters.com covers, $76 billion worth of stock was purchased by retail investors in three months. Inexperienced, but hungry for better ways to grow their money, a swathe of people have played with smaller sums and built their own strategies.
There’s still a long way to go. 90% of trading volumes are still done by institutional bodies. But retail investment offers better yields than low-interest cash accounts and more flexibility and control than many alternative savings products like an ISA. Now the barriers to access are gone and anyone can set up a portfolio from their phone in minutes. It seems highly likely we’ll see continued democratisation of investing.
Educating newcomers will be the next big obstacle for the generation of investors and it will need to be done quickly to avoid running into trouble. New assets are unpredictable, platforms offering many assets can be overwhelming and emotional investing is very common amongst newcomers.
Thankfully, many platforms have made education a free-to-access foundation of their platforms. It is possible that investing could become everyone’s new side hustle in only five years – but we’ll have to concede that only time can tell.
