Where retail investors and entrepreneurs are investing now

Cryptoassets are very high risk and you should be prepared to lose all your money before you invest

• Bitcoin and crypto stocks: examining the risk

• HSBC’s Entrepreneurship Wealth Report and Finimize’s Modern Investor Survey showed where everyday investors and entrepreneurs align – and where they don’t
• Both groups are leaning into riskier bets like stocks and crypto, but retail investors are a lot more into stocks
• Private markets, meanwhile, are a much bigger game among entrepreneurs.

HSBC regularly asks its global business-owning customers about how they’re spending, saving, and investing, and publishes the results in its Global Entrepreneur Wealth Report. And at Finimize, we do something similar, surveying our savvy, retail investor readers about how they see things, for our worldwide Modern Investor Pulse. So, I decided to stack one set of answers against the other, to see where the thinking overlaps (and where it diverges).

Turns out, the two groups agree on a lot – and differ in the most revealing ways. Here’s what they said, and my take on what it means for the market.

Stocks are still a draw

Most retail investors (67%, to be exact) think global stock markets will be higher in a year, and 68% are planning to buy more shares in the next year, up two percentage points from last quarter. The favourite sector is still tech: with NVIDIA Corp (NASDAQ:NVDA), Apple Inc (NASDAQ:AAPL), and Microsoft Corp (NASDAQ:MSFT) topping their wish lists.

Entrepreneurs aren’t quite so enthusiastic: 46% own stocks, but only 25% said they’d add to their stock holdings. They’re putting money into other stuff instead: investing in their own businesses, private assets, and real estate.

And here’s my view. Stocks may be sitting near record highs, but they’ve still got room to run. The slide in interest rates and the weaker US dollar are boosting assets. And AI continues to wow companies and investors – with China’s players becoming a rising force. So yeah, I’m still bullish on US and global stocks – and especially those making AI strides.

Crypto’s crossed the threshold

For the first time in three years, more investors are optimistic about bitcoin than global stocks – with 69% expecting it to rise. But only 32% plan to invest, which suggests that curiosity hasn’t yet turned into motivation. A lack of knowledge seems to be holding folks back: 24% of respondents said they want to know more about the asset class, compared to 22% the quarter before. Entrepreneurs are further along: 44% already own crypto, and 27% plan to buy more.

Here’s my view. I’m a fan. Regulation is improving, adoption is expanding, and that’s bound to keep prices on the up. Bitcoin is still the biggest crypto and the main digital store of value, sure, but ether is looking increasingly attractive, with the Ethereum blockchain the hub for most on-chain transactions. Just remember: volatility is still the name of the game in crypto – so size your positions accordingly. A 1% to 2% allocation is about right for most portfolios.

Private markets are still mostly out of reach

Private markets are hot among entrepreneurs – 46% own them and 41% are looking to add more. But they’re not so hot among the retail crowd: just 10% are in – and only 12% have plans to invest in the next year. And that’s despite the growing hype.

Two-thirds of everyday investors said they’ve been hearing more about private markets, but with the bigger balance required to enter and the overall murky nature of the assets, they’ve been holding back.

Here’s my view. The opportunity here is real – and so are the risks. Direct lending platforms can help connect you with promising assets. But these markets can be opaque and thinly traded, and retail investors might be invited in now only because the usual institutional investors are stepping aside. If you’re considering stepping in, tread carefully and do your homework.

Money talks, and so do bonds

With markets still volatile and the inflation picture uncertain, cash and super-safe bonds definitely have their appeal. No surprise, then, that 28% of retail investors and 29% of entrepreneurs plan to increase their cash holdings in the next year.

Here’s my view. Cash and bonds always have a place in a diversified portfolio – but that’s especially true when things get choppy. Just don’t overdo it: if inflation picks up, it could eat away at the value of those holdings. So, make sure your emergency fund is stocked: long-term investing only works if you’re not forced to sell at the worst possible time. 

Russell Burns is an analyst at finimize.

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