2024 Global Retail Investor Outlook 2025

By addressing the key challenges to retail investing as the structural growth continues, the entire financial system, not just investors, have the potential to reap material economic benefits Individuals Financial system Page 18+19 Potential benefits Long-term wealth building: Investing can provide a pathway to wealth accumulation and help individuals achieve their financial goals such as buying a home, funding education or leisure, and securing a comfortable retirement.Broader trading pools: Increased individual participation ensures a steady flow of buy and sell orders, creating a more liquid market, especially when institutional investment is low (as demonstrated during the first months of the COVID-19 pandemic). Reduce wealth inequality: Bridge wealth gaps and promote a more equitable distribution of financial resources by building and preserving capital.Market participants diversification: A more diverse pool of investors helps to mitigate reliance on large institutional trading pools, reducing the risk of market manipulation and promoting ongoing price stability. Hedging against inflation and market flux: As stocks tend to historically outpace inflation, investing can help reduce financial risk, smooth out market volatility and preserve long-term purchasing power.Enhanced capital allocation: A large share of private capital can find its way to the most efficient companies and projects, maximizing resource allocation efficiency while driving economic growth and innovation. Enhanced decision-making: Engaging can empower individuals to make informed day-to-day financial decisions, including in key areas such as budgeting, savings and managing debt.Enhanced shareholder engagement: Active and informed retail investors can exert greater influence on corporate governance in the private sector, potentially leading to higher shareholder accountability standards and a longer-term growth focus. Stake in the economy: Investing can allow individuals to become part owners of the productive system and society they live in, securing rights to claim a share of their success and prosperity.Wealth creation and public spending mitigation: Retail investing can contribute to overall economic growth while reducing the burden on public spending programmes. Page 18+19 Potential risksGaps in financial literacy and excessive risk-taking: Gaps in financial knowledge can lead to poor participation choices and increased exposure of individuals to unaware risk-taking or fraudulent investing schemes.Pressure on market infrastructure: High trading volumes originated by retail investing activity can put a strain on the operations of key market infrastructure players, such as clearing houses and trading platforms, potentially leading to system disruptions. Inadequate investor protection: In some markets, weak regulatory frameworks, along with conflicts of interest at a service provider level, can contribute to lower long-term returns in retail investor portfolios. Price discovery distortion: Retail investors’ sentiment, especially when driven by short-term trends and narratives, can distort price discovery and lead to market values that do not reflect underlying fundamentals. Market fluctuations: Volatility systematically promotes worries among retail investors over their portfolio outcomes, with potential “loss trauma” derived from underperforming initial investments, hindering long- term engagement with capital markets. 2024 Global Retail Investor Outlook 18