New technology is revolutionizing what the average person can do with money. We’re seeing the rise of new types of investments, higher levels of accessibility for existing investments, and more efficiency, which ultimately leads to even further consumer engagement. So how, exactly, is this accessibility improving, and where can it go from here?
The emergence of online brokerage platforms completely changed the game for investing in stocks and bonds. While this hasn’t been good news for stock brokers in the financial services industry, it has made an otherwise complicated and confusing method of investing more accessible. Modern platforms allow average people to place trades with a single click, and some are even able to offer low- or no-cost trades, such as Robinhood’s famous “free trade” model.
New technology has also made real estate investing more accessible. Historically, real estate investors have been limited to investing in their surrounding locations, but thanks to the presence of virtual tours and similarly immersive types of tech, it’s possible to view and inspect properties remotely. And with the plethora of online options available, you can easily find a property management service provider who can help you manage the property remotely.
Crowdfunding and Loans
Online interactions are also opening the door to new opportunities, based on the amount of visibility you can generate with an international audience. For entrepreneurs or inventors looking to gather the funds necessary to make their business or product a reality, crowdfunding platforms like Kickstarter are available.
In the wake of crowdfunding, there’s been a push for more crowd-based fundraising and investing platforms. Peer-to-peer lending, the process of contributing capital to crowdsourced loans, is becoming more visible and more popular, with platforms like Prosper leading the charge. And despite being heavily restricted and regulated in the past, there are more opportunities than ever for equity crowdfunding.
Research and Engagement
We also need to consider the vast number of tech-based resources available to the average investor. Smart investments aren’t based on “right” or “wrong” decisions; instead, they tend to favor people who balance the strengths and weaknesses of each investment they make and understand the consequences and potential payoffs of their decisions.
Resources like SeekingAlpha have made it easier for people to read and understand detailed analyses of stocks, bonds, ETFs, and other investment types, as well as post analyses of their own. And of course, the emergence of social media and other forums have democratized the conversation.
Fees and Transaction Speeds
New tech is also making transactions of stocks, bonds, currencies, and other investments much faster—and cheaper for the average consumer. Over the past several years, the average transaction fee has plummeted, and it’s only going to drop more in the future as brokerage platforms become more competitive. New systems are capable of handling much higher volume with a fraction of the resources, and consumers get to reap the rewards.
Why Accessibility Is So Promising
The accessibility dimension is important for several reasons:
Wealth and retirement. When people invest wisely and consistently, they can build wealth, and work toward a financially stable retirement. This could ease the burden on social systems like social security and Medicare, and ensure that more people have access to the resources they need to live a comfortable lifestyle.
Profitability. Though fees are decreasing, financial institutions stand to profit more when more people are using their platforms. More money is in circulation, which drives economic growth, and the people investing in these financial institutions stand to gain just as much.
Opportunities. There are also more opportunities for the average consumer. For entrepreneurs and inventors, crowdfunding is a possibility. For those in dire financial straits, crowd-based loans can serve as a bailout.
So how could better tech make investing even better in the future?
For starters, we’ll see development along similar lines as we’ve seen in the past. Transaction speeds will increase, transaction fees will decrease, and new platforms will consistently emerge to offer consumers new choices for investment. We’ll also see a trend toward democratization; fee-free trading platforms and blockchain-based currencies are just two examples of how decentralization and crowd-based technologies can transform the world of investments.
We’ll also likely see more integration and more outreach, making investments available to populations who might not have otherwise gotten involved. Investment platforms integrated with common social media platforms, or even mainstream bank accounts, for example, could introduce the idea of investing to a wider audience.
In any case, the world of investing is likely to continue evolving for the foreseeable future. In the span of a decade or two, even our current understanding and approach to investing may become unrecognizable.
Larry Alton is a professional blogger, writer, and researcher who contributes to a number of reputable online media outlets and news sources. A graduate of Iowa State University, I’m now a full-time freelance writer and business consultant.