Like so many aspects of our lives, investing has been transformed in recent years.
Whilst technology is an important driver of this change, it’s not the only reason our approach and attitudes towards investing have changed.
In fact, how we invest, what we invest in and why we choose to invest in the first place have all evolved thanks to a multitude of factors. And in order to visualise what the future of investing might look like, we need to look back at the changes that have occurred in recent years.
How we invest
Technology has changed how we shop, eat, bank and date, offering us simpler, cheaper and more convenient products and services. The way people invest has also profoundly changed, with online platforms and smartphone apps reshaping brokers and investment managers.
These technologies have made investing accessible to everyone. The first generation of online trading platforms removed barriers to entry, meaning that people could invest without having to use traditional expensive banks and brokers. We can now assess our financial position, read the news and make investment decisions with a few taps of a phone or tablet.
We can expect the pace of change to quicken. Biometrics will strengthen security. Artificial intelligence will improve investment recommendations.
Fundamentally, what’s changed is how people access investing. Technology has lowered the barriers to entry and the costs. As a result, more people are investing than ever before.
What we invest in
There has also been an explosion in the range of investments that people are accessing. As technology made investing more accessible, investors placed a higher emphasis on costs. Hence, there has been huge growth in low-cost tracker funds and ETFs.
We’ve also seen the emergence of investments that didn’t exist before technology made them possible. For example, peer-to-peer lending is now a popular category of investment that focuses on bringing together borrowers and lenders via online platforms. A decade ago, this type of investment didn’t really even exist. Equity crowdfunding is a similar success story.
Technology, progressive regulation and a fintech boom has also opened up a range of products to retail investors that used to be only available for institutions or high net worth individuals.
That’s what we focus on at WiseAlpha, giving retail investors access to the corporate bond asset class, which used to be only accessible to bankers in suits sitting at expensive Bloomberg terminals. We’re liberalising the asset class, making it accessible to a wider audience.
Whilst shares have been widely available to purchase digitally for some time, the corporate bond market has been slow to catch up, remaining a little archaic and unchanged for many years. The lack of access to such a large part of the market meant that investors couldn’t truly diversify their portfolios across asset classes as the investing technology wasn’t available.
Why we choose to invest
Why people invest has changed too. Sure, traditional reasons still apply, as people still want to save for their futures but there has been a shift towards making investments that mean more than that. Investing nowadays is, in some respects, about showing what you believe in.
For example, the huge rise in impact and CSR investing shows how people don’t want to be rewarded just by pure profit. Rather, they want their capital to do good in the world or, rather, they don’t want it to do bad. Further, investments like crowdfunding gives investors the opportunity to participate in the future of companies and products that they believe in.
Corporate bonds are also interesting from this perspective as they allow investors to put money into companies that they believe in. Unlike peer to peer lending, corporate bonds offer a predictable income stream with less volatility. You can see a huge range of companies that you can invest in on the WiseAlpha Market here and there’s likely a company to suit your requirements.
Why we invest is no longer just about making money. Investing is about a resolve to be a part of something that reflects who you are as an individual. We’d expect to see this trend grow as topics like the environment and health become more important and more frequently discussed.
As we’ve discussed, the traditional ways and means of investing, as well as the reason why people invest, have changed a huge amount in recent years.
And we expect these changes to only accelerate as technology develops and people’s attitudes continue to change too. If you’d like to discuss any of the above, we’d love to hear your thoughts so do please drop us a line at firstname.lastname@example.org.
Find out more about investing with WiseAlpha. All factual information true at the time of publishing.
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