New Investors Display Higher Risk Tolerance, Greater Confidence: Fidelity

You’ve got to risk it to get the biscuit.

New retail investors — those who have been in markets for five years at most — are looking at tariffs, geopolitical tensions and overvalued stocks and saying “Psh, whatever.” Nearly 20% of new investors want to grow their wealth even if it means greater potential for loss, and more than half see their portfolios performing better over the next year than the past 12 months, according to Fidelity’s inaugural State of the American Investor study. Meanwhile those who have been investing for more than 11 years have a less positive outlook and are most concerned with limiting losses. 

Newcomers started building their portfolios in a bull market when retail investing became highly accessible, so they’ve yet to face the reality check of downturns their more experienced counterparts have grown to anticipate. While markets generally perform better over time, it’s up to advisors to prepare bright-eyed new clients for potentially rainy days … or months.

“Especially in times of market volatility, knowing and sticking to your plan can help maintain a level head,” said Josh Krugman, SVP of brokerage at Fidelity Investments. 

Hodl Steady

New doesn’t necessarily mean younger, even though that’s the case for many investors. Younger clients are expected to be more risk-tolerant since they are building wealth and have plenty of time to make corrections. “As you invest over time, you learn from your mistakes, and hopefully don’t make those same mistakes again,” Krugman told Advisor Upside. 

That risk entails more than just heavy exposure to stocks over fixed-income, however. Nearly 55% of new investors said their portfolios were more diversified than their parents’. New investors’ top priority is building their financial knowledge, and the study showed that they are more familiar with advanced income-generation methods like fully paid lending, bond ladders and covered calls, while also favoring non-traditional assets like crypto and other alternatives. In fact, crypto can be a big indicator of a client’s mentality, the study found:

• More than half of crypto holders predict the stock market will perform better in the next 12 months, compared with just 31% of investors who don’t hold any crypto.
• Also, crypto investors are two times as likely to say their risk tolerance is higher than it was in 2024.

“Regardless of a client’s age, it’s always important to help your clients develop a financial plan that they can stick to,” Krugman said.