Rising house prices, low interest rates, a desire to learn, and fear of missing out are pushing more people to use retail online trading platforms.
The Financial Markets Authority has researched the behaviour and intentions of the large number of new, retail investors who have started using these tools.
It found the three most common reasons investors wanted to use these platforms was to grow their money, they were cheap to use, and they wanted to learn more about investing in general.
Recent economic conditions were also a motivating factor, with respondents saying that low interest rates and the unaffordability of housing led them to look for new ways to invest.
"These online platforms have made it easier for people to access the markets and learn about investing - 34 percent of investors said they now have a better understanding of markets after using the platforms," FMA chief executive Rob Everett said.
The cornerstone of most portfolios was KiwiSaver, an investment property, or a savings account. Shares, bonds and exchange traded funds made up about 47 percent of their portfolio.
Cryptocurrencies represented about 3.2 percent of people's investment mix, and derivatives accounted for less than 1 percent.
Everett said it was a concern that more investors with little experience were looking to put their money into riskier assets.
"We would really be concerned if we felt that people were putting their life savings into a cryptocurrency ... because the risk there is very different to a standard investment."
The majority of investors appeared to adopt a buy and hold investment strategy, but about 2 percent traded daily.
Everett said almost a third of investors reported that they had jumped into an investment in the past two years because they had a fear of missing out (fomo).
"And, 14 percent of investors are looking for a 'moon shot', indicating they are okay with risking a lot of money if there is a big reward."
He said this was only concerning if people put large amounts of money, that they could not afford to lose, into these investments, Everett said.
Just above 80 percent of respondents said they consulted at least one source of information when making investment decisions, with online forums being the most common, followed by news reports, and advice from people they trusted.
However, less than half considered a company's annual report or a fund's disclosure document when making a decision.
Everett said this was becoming a common theme among new investors entering the market.
"We just have to acknowledge that risk that a lot of people are listening to commentators who really don't have a lot of experience."
The research also broke respondents down into four categories that revealed their investor profile, speculators, planters, opportunists and dabblers.
He said he hoped more investors would move into the planter category over time.
Most investors tended to be European males aged between 25 and 34.
The general manager of share trading platform Hatch pushed back against suggestions new investors were uninformed and driven by fads.
Kristen Lunman said FOMO could be positive because it saw people, who may have been hesitant in the past, to get into the sharemarket for the first time.
"There is a positive in that [it is showing people] there is an alternative to putting money their to work."
She downplayed the concerns about investors' financial know-how, saying its customers were not risking large sums of money and were learning on the job.
"When we launched [Hatch] there was this concern that people were going to put their life savings, or their house deposits, or get rid of their KiwiSavers and [start investing].
"But we have found the complete opposite."
The data shows that people are starting small, learning by doing and growing their investments over time, she said.