How Retail Investors Make Decisions

Author: Max Rothery, VP Community at Finimize 

The retail investor activity was booming in January 2021. Over 1 million people a day were downloading fee-free trading apps, and 75% of those were just Robinhood. And get this: a quarter of all equity trades on the stock market were made by retail investors.

I became obsessed with how those people were making investing decisions. I’d spent 3 years at Finimize discussing how we could give people the confidence they need to invest. All of a sudden, I was seeing millions of people make investing decisions – with confidence – in minutes. 

The world of investing had changed. I wanted to understand the new behaviors that came with it, so I sat down with hundreds – and surveyed thousands – of our million-strong retail investing community. Here’s what I found out.

Retail investor share in the total US equity market, Credit Suisse Winter 2021/22

The three phases to every investment decision

Every investor I spoke to followed the same three phases: discovery, research, and execution. The folk I spoke to sit somewhere between complete beginners and professional investors: they know they should be investing, but they don’t have the time to do detailed research and analysis. Or more accurately, they haven’t found the right service to do it for them.

Phase 1: Discovery

Idea discovery is passive for most retail investors. They typically curate their “information diet”, a stream of information they can scan through as part of their morning routine – from the news, social media, newsletters, and friends. The more sophisticated the investor, the more curated their information feed is. If this sparks an idea, it’ll trigger the research phase.

Modern Investor research journey. Source: Finimize Community research, 2021

Phase 2: Research

Modern investors do lazy research. They’d head to Google, often transitioning from mobile device to web. They’d search: “is X a good investment”. They’ll pull up five to ten different tabs across blogs, free articles on Bloomberg, and opinions on Seeking Alpha. 

Financial data

Most of our community knew financial data was important, so they might head to Yahoo Finance or Google Finance to check out the figures. But time and time again, I’d see them look at a page of numbers with no idea what they really meant. Even those that knew exactly which metric they were looking for, they still wouldn’t know whether, say, a PE Ratio of 12 is good or not. I asked one member why they did it: “Because I feel like I should, so it makes me feel like I’ve at least done some research”.


94% of the people we surveyed said they validated their investing ideas with their peers. In fact, we found that people put as much weight on the opinions of their peers as they would in a report they read by an analyst. That's down to how we build conviction in our decisions: no single accurate source dictates where we put our money,  rather it’s typically an accumulation of proof points – each with equal value. It could be something that’s trending in the news, a product you keep spotting in your daily life, a positive piece of analysis, or a friend's positive experience with the stock.


Some would make notes during this process, to capture interesting analyst opinions, record key data points or remember the big news they should watch. A tiny percentage had a decent way to store those notes, and the vast majority kept a mash of Apple notes, paper, and emails. A handful could even find the fruits of their research labor. Only a few sophisticated investors would curate and tag their notes and articles around a theme, and the process was pretty inefficient for the rest.


A watchlist ought to be the place you head before you make your monthly investment: it’s a list of curated stocks that you’re researching while you wait for the right entry point, and it can help you build a better picture of how the stock performs relative to the markets and its peers. For most time-poor investors, watchlists are just a graveyard of stock ideas they once had with no correlation to each other.  Keep that up for a few weeks, and you end up with nothing but a mess.

Phase 3: Execution


Execution in markets with developed financial infrastructure is the smoothest part of the journey. Fee-free trading apps have made it cheap, fast, and frictionless to buy a stock. The interesting part is that retail investors have become platform agnostic. Most have 3 to 5 apps they use to buy stocks, and whichever offers the broadest coverage and the easiest user interface for the cheapest price will normally win.


The decision to invest typically hits after they’ve got their paycheck and paid their bills. Some beautifully curated notes and watchlists would add real value to an investment decision, but folk usually end up simply more susceptible around this time depending on what we’re reading or what’s being discussed.

Risk management  

When retail investors do invest in risky assets like individual stocks, they tend to do so with small amounts of money. They monitor how that investment performs, and then continue to add to that investment depending on their conviction over time.

What does this mean for the wealth industry?

At Finimize we believe in empowering, which means building around our member’s behaviors – not trying to change them. I discovered that the current modern investor’s decision-making process is highly fragmented, and to truly democratize investing for everyone, we need to go beyond just democratizing access to the tools. We need to democratize investing information, and the quality of that experience needs to be designed with the modern consumer in mind. Just imagine what difference it would make to modern investors if researching your next investments was as convenient as curating a playlist on Spotify. This is an opportunity prime for every brand in the wealth-building industry to seize.

Keen on partnering with Finimize? 

Finimize is a financial insights platform that supports the most engaged retail investor community in the world. We’ve helped more than 250 brands from Fintech disruptors to traditional Financial services brands with growth and engagement. Get in touch here.