Gen Z investors tend to favor investments that promise quick and dramatic returns in short amounts of time, without becoming trapped in an FOMO loop. They also favor DIY platforms that enable ethical investing.
Stocks remain the top investment product for many investors, followed by growth and value stocks as well as cryptocurrency as an emerging investment option.
1. They’re Interested in Long-Term Gains
As Generation Z begins entering the workforce, their financial goals are becoming clear. Priorities include saving money, paying down debt, improving credit scores and investing.
They have seen both their parents and millennials navigate two recessions, teaching them the value of conserving spending and building wealth through wise investments.
This generation is more likely than previous generations to invest in stocks (60%) and crypto/blockchain (39%), although they tend to prefer lower-risk investments with long-term gains over short-term ones. They also prefer having multiple ways of receiving their wages.
TikTok, Instagram, and Discord are ideal platforms to reach this group and educate Gen Z on why equity compensation can help increase both their bottom line and long-term returns.
2. They’re Wary of Get-Rich-Quick Schemes
Gen Zers have seen their predecessors deal with economic setbacks more adeptly and take a more conservative approach to investing. They want their money saved wisely rather than frittered away on frivolous spending habits – prompting more savings compared to prior generations.
Gen Z investors are also more likely to invest in stocks, bonds, or funds; according to a study by CFA Institute and FINRA Investor Education Foundation, six out of ten Gen Z investors own at least some investments – starting investing as early as age 21! 82% started before then!
These investors are open to taking risks and exploring alternative investments such as fine art or non-fungible tokens (NFTs), but are wary of any get-rich-quick schemes; instead they prefer financial experts who provide honest guidance.
3. They’re Preferring Data Driven Investments
Gen Z is an extremely comfortable generation when it comes to technology, preferring data-driven investments when making investment decisions.
Influencers who promise high returns should be approached with caution, and investors are more likely to invest in community-level funding if it aligns with their values. Philanthropic investing and sustainable investing also exist amongst them.
Gen Z investors place more value than millennials and Gen X investors on author credentials and expertise when evaluating information sources, and on recommendations which align with their investing strategy. As such, Gen Z can be attracted by providing content tailored specifically for them, which will build trust.
4. They’re Preferring DIY Platforms
Generation Z investors face an evolving investing environment with many potential hurdles and golden opportunities, driven by global events, rapid technological development, cryptocurrency investments and sustainable investing practices.
According to our research, 82% of American Gen Z investors started investing before turning 18. They use social media and web searches for investment information; yet remain skeptical and know how to recognize credible sources.
Due to this trend, many investors are turning towards DIY platforms where they can invest their own funds without incurring high commission fees or relinquishing control of them. Furthermore, these investors favor investments such as bank FDs or gold that offer steady returns – something many platforms cannot provide.
5. They’re Preferring Low-Risk Investments
Gerri Walsh: To stay competitive in our industry, it is imperative that we recognize Gen Z is different than previous generations. They’re heavily impacted by social media trends and look to YouTube and TikTok for investment information; therefore, understanding their habits and preferences in relation to what’s trending is important – be that meme stocks or the latest finfluencer recommendations, for instance.
This report offers an interesting comparison between Gen Z investors in the UK, Canada and China and those who identify with Generations X or Millennial. While Millennials and Gen X investors often seek advice from professional financial advisors when investing, Gen Z tends to use fee-free trading platforms on their own for investment advice – providing access to a wider selection of investments with lower risk returns.