Since the post-2008 recovery and especially after the COVID-19 pandemic, retail investors have shifted from peripheral market participants to a central driving power. Once responsible for roughly 10% of daily equity trading volume, they now account for over 20%, actively shaping market momentum and valuations. This transformation stems from a powerful blend of unwavering optimism in equities, evolving demographics, and innovative platforms.

Core Thesis and Historical Context

Over the past decade, retail investors have grown from a marginal presence to a dominant market force of retail investors. In 2021, they accounted for 52% of global assets under management (AUM), a figure projected to rise to 61% by 2030. Net purchases in the first half of 2025 reached $155.3 billion in single stocks and ETFs, underscoring their expanding footprint.

This dramatic surge followed the skepticism of the post-2008 era, as technological platforms and social media communities empowered individuals to bypass traditional gatekeepers. The result is a market increasingly influenced by millions of retail accounts opening each year, hungry for growth and eager to participate.

Demographic Profile and Growth Trends

Retail investors today are predominantly young, diverse, tech-savvy individuals from average-income households. Around 95% live outside major financial centers, earning an average of $40,000 per year. The demographic shift is striking: in 2022, 43% of new retail accounts were opened by Millennials and Gen Z, with 71% of Gen Z starting to invest post-March 2020.

Gen Z investors often begin during university or early adulthood—30% compared to 9% of Gen X and 6% of Baby Boomers—and 86% of them self-educate through online resources, dwarfing the 47% among Boomers. Charles Schwab reported more new users in 2020 alone than in 2018, 2019, 2021, and 2022 combined.

Influence on Market Dynamics

Retail investors now fuel market momentum amid caution. A decade ago, they contributed about 10% of daily trading volume; by mid-2025, that share exceeded 20%. Their net purchases of $155.3 billion in H1 2025 helped sustain the bull run, even as hedge funds and institutions adopted a more cautious stance.

The UK market saw £52 billion in retail flows to the FTSE 100 in 2025, though net outflows of £6.3 billion highlighted volatility. Meanwhile, the AIM index enjoyed inflows on 80% of trading days, showcasing retail appetite for smaller, high-growth stocks.

Sentiment and Outlook for 2026

Surveys reveal that retail investors remain optimistic: 63% expect the bull market to extend into 2026, and 78% report steady confidence in their portfolios. With 62% on track to meet their goals and only 1% planning to sell, the collective mindset is resilient.

However, they are mindful of headwinds. According to a global eToro survey, the top risks are:

• Political uncertainty (42%)
• Slowing economic growth or recession (40%)
• Persistent inflation (38%)
• Supply chain shocks (29%)
• Geopolitical tensions or war (27%)

Despite these concerns, 30% plan to invest more if interest rates decline. Their preferred allocations include:

• Growth stocks (25%)
• Cash and short-term instruments (23%)
• Dividend-paying equities (19%)
• High-yield bonds (18%)
• Cryptocurrencies and real estate (17% each)

This data underscores a high confidence despite potential risks, with retail investors ready to adjust portfolios based on macroeconomic shifts.

Behavioral Shifts and Technological Enablers

The rise of app-only brokers, zero-commission trading, and 24/7 access has revolutionized participation. Platforms now offer educational tools, real-time analytics, and social feeds, fostering communities that learn and trade together. This technology-driven access and education has lowered barriers and empowered the average person to invest alongside professionals.

Behaviorally, retail investors have evolved from a short-term focus—44% targeting quick gains in 2020—to a more diversified, cautious approach today. About 65% continue investing through market fluctuations, and 29% are actively adding to their positions, balancing optimism with risk management.

Expert Insights

eToro strategists point to the pivotal role retail investors play in sustaining rallies. According to Bret Kenwell, “Retail investors remain confident, focusing on positives like strong corporate earnings and the potential for falling interest rates. Long-term trends favor the bulls, but diversification remains key.”

Kenwell warns of looming challenges: “After three incredible years of returns, political shifts, labor market concerns, and inflation could introduce volatility. Investors should adjust portfolios to weather uncertainty.” He advises a balanced strategy: “Align your allocations with your goals—blend defensive assets with growth opportunities and stay committed to a long-term horizon.”

Conclusion

The retail investor’s ascent marks a fundamental shift in global markets. From a modest 10% share of trading volume to over 20%, and from distrustful individuals to a confident, organized community, their impact is undeniable. As technology and education continue to lower barriers, retail participation is set to grow, potentially controlling over 60% of AUM by 2030.

Looking ahead to 2026 and beyond, retail investors face both opportunities and risks. Their collective optimism, guided by data, community, and technological tools, positions them as a formidable market force. By embracing diversification, staying informed, and maintaining a long-term perspective, they can chart a path to financial empowerment and help shape the future of global finance.