How GenZ is investing in stocks, cryptos

4 min read | November 14, 2021 12:46 AM AEDT | By Rishika Raina

Google News:

How GenZ is investing in stocks, cryptos — Image source: Creative Stock Studio,Shutterstock

Recent News

Paladin Energy Ignites Uranium Surge Into ASX 100 Entry

Can Your ASX Dividend Stocks Actually Beat a Term Deposit in 2026?

Why ASX Mining Dividends Just Flipped the Income Playbook

ASX Consumer Stocks Face Selloff Value Opportunity Shift

Make Kalkine Media
My Trusted Source

Highlights

Around 16% of British Gen-Zers started investing for the first time during the pandemic as per a Halifax survey conducted earlier this year.

The main reason that a lot of Gen-Zers have entered the equity markets recently is the amount of spare time at their disposal during the pandemic.

Speculative day trading has been very popular among young investors.

People across all age groups can start investing their savings and the number of young investors has lately been rising. During the phase of the pandemic, people aged between 18 to 24 years, or so-called Gen-Zers, have been utilising their extra time productively to learn about investing and getting rich quickly in the short term. Around 16% of British Gen-Zers started investing for the first time during the pandemic while this figure stood at 10% for people across all age groups, as per a Halifax survey conducted earlier this year.

The main reason that a lot of Gen-Zers have entered the equity markets recently is the amount of spare time at their disposal, giving them the opportunity to analyse the markets and conduct independent research. Nevertheless, the trend is expected to continue among the money savvy GenZ. According to a Barclays Smart Investor survey conducted a few months ago, there was an 88% increase in the account openings last year, and around 50% of the investors were willing to reduce their expenses to maintain their habit of investment. Young, tech-savvy investors are engaging with online brokerages and their engagement levels have been touching record highs as they have been getting insights about the market from YouTube tutorials and Reddit forums. An added incentive has been the turning up of low commission trading online.

Young, tech-savvy investors are engaging with online brokerages.

However, the market analysts say that it was comparatively easy for these self-directed investors to make money during the bullish recovery phase, as the market sentiment was up due to the continuous stimulus provided by the Government. Also, during this phase, the investors shifted their money to equities due to lower yields, which in turn raised the prices.

The surge has also proved to be advantageous for traditional brokers and wealth managers. Hargreaves Lansdown had reported that the signing up of younger investors led to a fall in the average age of its clients to 47 years in the first half of 2020, making its profits jump up significantly.

Speculative day trading has been very popular among young investors and their portfolios have been generating great returns through engagement with social media investments and exchanging memes about popular penny stocks like GameStop and AMC which led to a surge in their valuations. But GenZ is also cautious about the risk factor associated with investments. According to a UK investment platform FreeTrade, GenZ traded smaller amounts of money and at a lesser frequency in comparison with their older counterparts. Among the top 10 holding of GenZ, 5 were exchange traded funds (ETFs), or passive investments.

According to a survey conducted earlier this year by a financial services adviser, CreditCards.com, the probability of GenZ investors getting financial advice was five times more as compared to adults aged over 40, with 28% asking for advice from friends and online influencers. Around 80% of GenZ investors were likely to get financial advice, and this figure stood at 64% for Gen X investors, and 60% for baby boomers.

Bottom Line

There are many investment options for young investors, which include stocks, ETFs, mutual funds, index funds, and so on. GenZ is learning the art of diversification and has been attracted towards the exciting market opportunities to get rich quickly.

However, amid the rise of GenZ investors, the UK’s Financial Conduct Authority had warned that around two-third of the young entrants in the market were going for investments with high risk, like cryptocurrency and forex, which could potentially lead to significant losses. Thus, it is important for these young investors to have a deep understanding of the market before jumping into the pool of risky investments.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.