Retail Risk in Investors' Portfolios During the Pandemic

This research report examines the investment behaviors and risks associated with retail investors' portfolios during the COVID-19 pandemic. It utilizes a dataset of 500,000 investors from 2019 to 2023 to analyze the significant increase in individual participation in financial markets, particularly through self-directed brokerage accounts. The report details how the share of U.S. households with stock holdings reached a record high by 2022, with a notable increase in the movement of funds from checking accounts to brokerage accounts during the pandemic. Key findings indicate that market risk in retail investors' portfolios increased by an average of 15 percent from 2019 to 2021 and remained elevated through 2023. Additionally, it highlights demographic trends, noting that women generally held less investment risk compared to men, and younger investors tended to have more market risk than older investors. The report emphasizes the need for policymakers to consider these dynamics when assessing macroeconomic impacts on individuals.