Nearly 30% of Generation Z—those born between 1997 and 2012—began investing in financial markets during early adulthood, often before entering the workforce, according to a World Economic Forum report. This contrasts sharply with 15% of millennials and 9% of Generation X who did the same.
Early Start, Early Lessons
Ambrico Ranginui first encountered cryptocurrencies at age 12. By 16, he had saved enough from birthday gifts and allowance to invest. Growing up in a single-mother household, he felt determined to get ahead and saw crypto as a fascinating new avenue for making money. However, the volatility taught him a painful lesson. For about a year, he lived in constant stress, checking investments instead of enjoying time with friends or focusing on classes. He declined to specify his losses, but they were enough to stop investing in crypto. Now 21, Ranginui works as an investment analyst at Flatmate Ventures, a venture capital firm backing student entrepreneurs, and has invested in lithium, robotics, and artificial intelligence.
Why Gen Z Invests
The Guardian interviewed over a dozen active Gen Z investors worldwide, who cited economic uncertainty, a pervasive online investing culture, and historically low barriers to entry due to technology and AI. Ranginui noted that New Zealand's fintech app Sharesies inspired many peers to invest by appearing in Gen Z social media spaces and providing accessible financial education. Gen Z faces a jobs crisis with nearly 8% unemployment for those aged 22 to 27, compared to about 6% seven years ago and 4.3% across the US, while consumer prices continue to rise. Cuts to social welfare programs and the decline of employer-sponsored retirement plans have eroded safety nets. Natalya Guseva, head of the WEF's financial markets and resilience initiatives, explained that with less financial stability and fewer social safety nets, the responsibility shifts to individuals to manage their financial well-being. Technology makes investing easy, with information available at one's fingertips, unlike previous generations.
Slow and Steady Approach
Many Gen Z investors are cautious. The majority favor long-term investing in low-cost, diversified funds such as exchange-traded funds (ETFs), according to Andy Reed, head of behavioral economics research at Vanguard. He described them as the most cost-savvy generation, learning about investing early and showing genuine interest in market participation. A Nasdaq study found that about 75% of Gen Z hold ETFs in their retirement accounts, compared to just 60% of baby boomers. Shivana Anand, a 23-year-old software engineer in California, opened a Roth IRA as soon as she entered college and invested in diversified index funds. She funds her investments through a paid internship and uses automatic monthly deposits to passively grow her portfolio. Her portfolio is currently in the mid-six-figure range. She believes her money should work for her, and she prefers a slow, steady approach over active management to avoid stress.
Gambling or Investing?
A smaller cohort of Gen Z engages in riskier and speculative bets like day-trading and cryptocurrencies. Minwoo Lim, 28, founder of trading app PnL, began trading after mandatory military service in South Korea. He often trades commodities like crude oil. Lim acknowledges that gambling, by definition, is risking everything for large gains, similar to trading. Only about 4% of day traders earn enough to make a living, and about 10% are profitable, meaning at least 90% fail. Lim's degree in neuroscience gave him a psychological edge, helping him become profitable. Earlier this year, he made a 1,000 euro profit by holding long positions on crude oil after the US and Israel attacked Iran. He emphasizes that most Gen Z traders may not be profitable because they underestimate human behavior. He advises that long-term investors ultimately win over traders or crypto enthusiasts, and trading is only for those willing to commit their lives to it, recommending the S&P 500 for most people.
AI Advice
Nearly 41% of Gen Z would trust AI to manage their portfolios. Kelly Noel Mbunui Kameni, 22, based in Kenya, uses AI to double-check her investments in ETFs and the S&P 500. She takes photos of her portfolio and asks ChatGPT for suggestions on diversification. AI's convenience allows her to quickly summarize financial documents and make informed decisions. Kameni, on a scholarship for her undergraduate degree in finance, allocates a small portion to her portfolio. She has invested about 50,000 Kenyan shillings (roughly $400 USD), enough to start a small business in her country. She plans to continue investing to avoid working a corporate job while pursuing her masters and doctoral degrees, enjoying learning about finance and putting her money to work.
