Contributed by Laura Jarvis
Contrary to popular belief, stocks are still the preferred investment vehicle for millennials and Gen-Zers. In fact, a recent post on Yahoo revealed that 73% of Gen-Zers and 66% of millennials are actually investing in stocks. This disproves the increasingly common assumption that young investors are only putting their money in emerging and high-risk trends such as meme stocks and SPACs.
Members of these younger generations have grown accustomed to participating in a variety of investment markets, thanks largely to the accessibility of online trading platforms and brokerages. Regarding the former, we all know by now that there are trendy, modern services like Robinhood and Acorns that are designed in part to attract younger, more tech-literate generations. These apps use attractive interfaces, low fees, and simplified actions to make investing seem not only accessible, but sort of fun.
Traditional brokerages too, though, have grown more streamlined and attractive to young people. Per Wealthsimple’s article on brokerage accounts, it has become incredibly easy and fuss-free for investors to complete applications and deposit money to invest through these more traditional means as well. Furthermore, today’s online brokerages also offer lower fees and simplified trading methods (whereas in days past a brokerage account could involve somewhat more tedious practices). In short, online brokerages have caught up to the investment apps, meaning that at this point millennials and Gen-Zers are practically inundated with simple, appealing, and accessible options.
Another reason why there has been an increase in millennial and Gen Z stock investment is the economic upheaval brought about by the global health crisis –– which, as our “Canada Daily Data” makes clear, is not yet behind us. Indeed, per an analysis on BNN Bloomberg, investors under the age of 34 have increased their trading volume during the pandemic at a much higher rate than the rest of the population. Many young people were enticed by the opportunities following initial market crashes; some others turned to investing almost as a recreational activity during lockdowns. And in both cases, the aforementioned accessibility of investing apps and online brokerages made it easy even for market newcomers to act on those impulses.
It is estimated that some 58% of investors aged 18 to 40 now have strong investment portfolios including value stocks, dividend stocks, and growth stocks. Value stocks, which are offered by well-established companies that are trading below their projected worth, are in the lead when it comes to millennial and Gen-Z portfolios. On the other hand, SPACs and meme stocks –– which have received a ton of social media buzz and coverage –– are not as prevalent in younger adult investments.
Even so, the popularity of stocks amongst millennials and Gen-Zers does not equate to a strictly traditional and limited investment portfolio. Investors in these age groups know the importance of diversification. Aside from stocks, for instance, members of these generations are also invested in cryptocurrencies. To this point, an article by CNBC notes that younger investors believe in the impact of crypto and other blockchain technologies, and in many cases are entrusting hefty chunks of savings to investments in these categories. But because of the high risk and volatility involved with crypto investing, most are still keeping the majority of their investment capital in more traditional portfolios.
It’s long been known that investing is key to a secure and stable future. And thankfully, all signs indicated that today’s younger generations understand this far better than many tend to assume.