How Retail Investors Make Decisions

Written by

Max Rothery

VP of Community

Author: Max Rothery, VP Community at Finimize 

I'm obsessed with the way retail investors make decisions.

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

I’d spent three years at Finimize discussing how we could give folk the confidence they need to invest. And all of a sudden, I was seeing millions of retail investors making 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 stock market, Credit Suisse Winter 2021/22

There are three phases to every investment decision

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.) Every investor I spoke to followed the same three phases: discovery, research, and execution.

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. If the feed sparks an idea, that’ll trigger the research phase.

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

Phase 2: Research

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

Financial data

Most of our community knows that financial data's important, and they might head to Yahoo 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. As for those who knew exactly which metric they were looking for, well, they still weren't sure whether a P/E ratio of 12 is good enough. 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 those surveyed said they validated investing ideas with others, and they seem to put as much weight on their peers' opinions as they would in an analyst's report. That speaks to the way we build conviction in our decisions: no single source dictates where we put our money, it’s typically a collection of proof points instead. That can be anything: something that's trending in the news, a product you keep spotting in your daily life, an encouraging piece of analysis, or a friend's positive experience with the stock.


Some would make notes during this process to capture interesting analyst opinions, key data points, or major news. A tiny percentage had a decent way to store those notes, sure, but the vast majority kept a mash of Apple notes, paper, and emails. A handful couldn't even find the fruits of their research labor.


A watchlist is a list of curated stocks 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 some, a watchlist is the first place they check before they make an investment decision. But for most time-poor investors, watchlists are just a graveyard of stock ideas they once had with no correlation to each other.

Phase 3: Execution


Executing trades 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 stock – and retail investors have become platform-agnostic. Most have three to five 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 pay-check and paid their bills. Some beautifully curated notes and watchlists would add real value to an investment decision, but folk usually just end up more easily influenced around this time.

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, 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: that means building around our members' 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 the platforms and tools. We need to turn our attention to investing information, and the quality of that experience should 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. To me, 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 with growth and engagement, from fintech disruptors to traditional financial services brands. Get in touch here.

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