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Investing apps like Robinhood aren't gambling tools that push new investors to make risky decisions. They're actually a great way to teach young people how to invest.

Investing apps like Robinhood aren't gambling tools that push new investors to make risky decisions. They're actually a great way to teach young people how to invest.

Investing apps help make trading more accessible and less intimidating for new investors.
Prostock Studio/Getty Images; Samantha Lee/Insider




As new investors enter the markets, their investment experience can help them make better financial decisions.




The SEC's agenda is poised to drive new investors out of the markets by limiting innovative brokerage features.




But these investing platforms give newcomers valuable "behind the wheel" experience.




Jennifer J. Schulp is the director of financial regulation studies at the Cato Institute's Center for Monetary and Financial Alternatives.




Nicholas Anthony is the manager of the Cato Institute's Center for Monetary and Financial Alternatives.




This is an opinion column. The thoughts expressed are those of the authors.




See more stories on Insider's business page.


Experience is life's greatest teacher, and it's time that financial regulators recognize it. While there are plenty of courses on how to invest, new investors need time in the market to really understand it, as any professional will attest. Like hours behind the wheel while learning to drive, actual investment experience might be precisely what America needs to fix its abysmal financial literacy.Stock ownership is a path to building wealth, but many have been left out of the opportunities offered. Owning stock in the US has been highly correlated with race and age, and low financial literacy has likely worsened inequality. But over the course of the past year, a host of younger and more diverse investors have opened brokerage accounts for the first time, creating the potential to improve on these trends.However, rather than welcome new investors to the market, the SEC's 2021 agenda is posed to drive them out. Pointing to its "investor protection" mission, the SEC is looking to impose new regulations on the very features that encouraged new investors to participate in the market in the first place - like the "gamification" of trading apps that makes investing more engaging and less intimidating or the payment-for-order-flow that supports zero-commission trading. But while some advocates are trying to protect new investors from making poor decisions by limiting their access, brokerages are giving investors market experience that can help them make better decisions over time. The SEC needs to recognize the value of this experience in improving financial literacy and not limit new investors' access to the market.That's not to say that brokerages - including newer trading apps - are not without flaws. But it would be a mistake to overlook their recent successes in attracting new investors. A record-breaking 10 million new brokerage accounts were opened in 2020, and 10 million more have been opened so far in 2021. Through a combination of little-to-no service fees, low minimum balances, fractional share trades, and appealing app aesthetics, brokerages have forged a space that is not only welcoming, but fun.
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