3 Factors That Influence Gen Z's Investing Strategies and Mindset

Those within Generation Z – between the ages of 10 and 25 – were brought up in a world of technological innovation. This, in turn, affects their lifestyles, thinking patterns, and investing strategies.¹

To paint a picture of Gen Z’s influence, their financial power reached $360 billion in 2021.² Their earnings are forecast to increase fivefold to $33 trillion in 2030, surpassing that of millennials by 2031.³ Bank of America also predicts that Gen Z will become “the most disruptive generation to economies, markets, and social systems.”³

Here are three characteristics of Gen Z that may drive their investing strategies.

Gen Z gravitates towards social networks

Instead of relying on financial planners, investment firms, and other traditional media, Gen Z often turns to social media. About 34% learn about personal finance from TikTok and YouTube, and 5% credit other social media platforms like Twitter or Instagram.4 Another 7% responded that they get their information from personal research or online forums such as Reddit. Combined, that’s 46% – far more than the 23% who said that they learn from parents or family.⁴

Gen Z is the first mobile-first generation

According to a Robinhood survey, 16% of Gen Z investors are day-traders, compared to 1% of millennials and Gen X.⁵ During the pandemic, Gen Z filled the void of activities by venturing into investing—buying and selling stocks and crypto during the lockdown. Charles Schwab reported that 15% of stock market investors started investing in 2020, and 16% belong to Generation Z.⁶ This generation trusts their own research – not their grandparents’ and parents’ financial institutions – which may help explain their openness to crypto and investing platforms.⁷

Gen Zs are conscientious investors

According to a Bloomberg survey, Gen Z wants to invest in sustainable companies. Students said they want to invest in companies aimed at creating a better future. Most of those polled (51%) chose green and sustainable investing as having the biggest investment potential; 23% picked technology; 13% chose healthcare, and 8% chose cryptocurrency.⁸

Nearly half of the respondents (45%) consider investing to be important “for a better tomorrow.” This is far higher than the 25% who cited investing as a way to feel financially secure, and the 19% seeking wealth.⁸ Most of the students (40%) said they would choose to invest in “companies with a purpose” and 22% saw emerging and innovative technologies as the key driver.⁸

The Takeaway

These always-on digital natives rely on apps, source their own information, and pursue investment strategies that others may not consider. To reach Gen Z, financial services may benefit from adopting creative digital strategies and mobile-first solutions.

Sources

1. Here's Why Gen Z Gets Its Investment Advice From Social Media. July 21, 2021. Motley Fool.
2. New Research: Gen Z's disposable income reaches $360 billion . Nov. 16, 2021. PRNewswire.
3. Gen Z incomes predicted to beat millennials’ in 10 years and be ‘most disruptive generation ever’ Nov. 20, 2020. CNBC.
4. 34% of Gen Z Is Learning Personal Finance From TikTok and YouTube, Survey Finds. Jan. 12, 2022. Yahoo.
5. In a New Era of Investing, Gender and Generational Gaps Remain. Dec. 14, 2021. Robinhood.

6. The Rise of the Investor Generation: 15% of U.S. Stock Market Investors Got Their Start in 2020, Schwab Study Shows. April 8, 2021. Business Wire.

7. Millennials and Gen Z are a growing force in investing. The market needs to catch up. Nov. 18, 2020. Fortune.

8. Majority of Generation Z investors identify Green and Sustainable investing as the biggest trend of 2021. Feb. 3, 2021. Bloomberg.

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