Informative social interactions

•Discussions about household finances are limited to only a small subset of peers.•Higher individual connectedness is associated with more accurate past and expected returns.•This is not its only channel of influence on stock market participation and exposure. Household finances are confidential and discussions are limited to a subset of peers. We collect novel representative survey data to examine separately whether interactions with inner and outer social circles influence return perceptions, expectations, and exposure to a widely known financial instrument in a developed economy with multiple information sources. We find that a respondent’s connectedness, proxied by perceived prevalence of information or participation in the small financial circle, improves expectation accuracy indirectly, through boosting accuracy of perceived past returns; and influences stock participation and exposure not only by influencing expectations, but also directly.