Study: 86% of Romanian investors invest in the medium and long-term

A broker on the capital market in Romania conducted study carried out by the company regarding the identification of the attitude of investors and potential local retail investors regarding investments in the stock market, their appetite for investments, and how they understand and relate to investment instruments. The research took place between March and April 2024 and was carried out on a sample of 401 respondents, divided into investors and potential retail investors, adults aged between 25-65 from urban areas of Romania, with a monthly income of over 4,500 lei and savings of over 3,000 euros, with higher education and familiar with the use of technology in everyday life.

“Understanding the behavior and profile of investors on the Bucharest Stock Exchange is essential for developing a more stable and efficient investment climate in Romania. The research we conducted for the third year in a row provides an overview of the capital market in our country, including identifying opportunities and potential risks. The obtained information can help increase financial literacy among the population by providing solutions that address the needs and concerns of current and potential investors. The results of our 2024 study underline a notable increase in Romanians’ interest in the capital markets, reflecting a maturing of investment behavior and an inclination towards more frequent transactions. This is also evidenced by the increase in the share of the invested amount from the monthly income, corroborated with the decrease recorded by the average income of investors compared to 2023, which suggests the diversification of the investor base. Trading is no longer seen as an activity reserved exclusively for those with high and very high incomes. In relation to investors’ perception of investments, the vast majority consider trading as a way of investing. At the same time, there is a significant increase in those who see trading as a way of saving, one of the reasons being to protect themselves against inflation, which is still at a high level “, stated Mihaela Bîciu, CEO of Investimental.

In terms of trading and frequency of trading on the stock exchange, 55% of respondents have been trading for less than 3 years, while 45% have been active for more than 3 years, with an upward trend for people who have been trading for more than 3 years compared to 2023, when the percentage was 42%. In 2024, 73% of retail investors trade at least once a month on the stock market, slightly increasing compared to the 67% recorded in 2023. At the same time, 49% of investors mention that they trade in the long term, while 37% do it in the medium term. Only 14% of respondents said they trade in the short term. In this regard, there is a slight change in investment behavior compared to 2023, when only 9% of investors traded in the short term, while 90% had a medium- and long-term investment horizon.

In 2024, 47% of responding investors stated they allocate more than 15% of their monthly income to investments, with the remaining 53% allocating less than 15% to investments. There is an increase in the number of people allocating a higher share of income to investments compared to 2023 when the split between allocating more than 15% and less than 15% of monthly income was 43%-56%. As for the main reasons investors trade, in 2024, they mentioned achieving financial independence, long-term economic security, earning passive income, building a reserve to rely on, and improving lifestyle without significant changes compared to the previous edition of the study.

In terms of instruments held in the investment portfolio in 2024, stocks take first place (70%), followed by government securities/bonds (44%), cryptocurrencies (41%), mutual funds (29%), currency exchange (28%), ETFs (28%), corporate bonds (25%), commodities (22%), owned real estate (20%) and non-owned real estate (10%). Investor interest in the types of financial instruments remained relatively constant compared to the results recorded in 2023, with the most significant positive developments in 2024 being recorded for cryptocurrencies (+8pp) and owned real estate (+7pp).

In relation to investment perception, 89% of investors consider trading as a way to invest, down slightly from 2023 when the percentage was 93%. At the same time, 49% of respondents see trading as a way to save, up 10pp compared to the previous year. Among the reasons underlying the decision to invest in the shares of listed companies in 2024, investors mentioned the trust in the companies they invest in (59%), protection against inflation (47%), selecting companies they like (45%), compound interest (43%) and medium risk (42%). Compared to the 2023 study, the only significant development this year was the protection against inflation, which saw a 17pp increase among investors.

When asked why they invest in government securities/bonds, investors consider that such instruments are safer, present a low risk (83%), provide the guarantee of receiving the money back (59%), and do not present volatility due to the fixed interest rate (41%). Compared to the 2023 results, the most important change among the reasons to invest in government securities/bonds was recorded for the guarantee of receiving the money back, with a decrease of 10pp.

Regarding the markets they trade in 2024, 66% of respondents are active in the local market, while 61% of investors trade in the foreign market. Also, in 2024, the percentage of an investor’s portfolio allocated to the local market is 53%, with the remaining 47% allocated to the foreign market. The percentages related to the preference of investors and the allocation of the percentage of investments for the local and the foreign markets did not register significant changes compared to the results of the previous edition of the study. Investors aged 25-35 invest significantly more in the foreign market than the total number of respondents, while people aged 46-65 prefer to invest more in the local market than the average total.