Gen Z Investing: This Age Group Buys Stocks Earlier Than Older Generations

(MENAFN- ValueWalk) One of the best ways to amass wealth and build a retirement nest egg is to start investing early, even if it is with a small amount of capital.

Gen Z investing trends follow this logic, according to a new survey from Charles Schwab (NYSE:SCHW).

Schwab's 2024 Schwab Modern Wealth Survey found that 45% of adults in the Gen Z category, those born between 1997 and 2012, are investing in the market. They are investing at a higher rate than other generations did at this age, and starting at a younger average age.

The Schwab survey found that 58% of Americans are invested in stocks today, up from 53% in 2019 and an all-time high for this survey.

Baby Boomers are the most invested, at 63%, followed by Gen Xers at 58%, Millennials, at 54%, and Gen Zers at 45%. But that 45% total for Gen Z is higher than it was for older generations at this age.

It also found that the average American started investing at age 30, but that drops much lower for the younger demographics. In Gen Z, the average investor started at age 19, far lower than the Baby Boomers, who started at 35. Millennials began investing, on average, at age 25, while the starting age for Gen X was 32.

There are several factors that have led to more Americans, particularly younger generations, investing in the stock market.

“We of course saw the number of Americans investing go up during the pandemic, but there are a lot of factors driving this trend that were in place before that and continue to drive engagement today. Industry changes like lower costs and minimums to invest and get advice, broader access to sophisticated platforms and tools, a proliferation of investing information such as research and educational content, and significant product innovations have all made investing more accessible than ever before,” Jonathan Craig, Head of Investor Services at Charles Schwab, said.

The survey also found that 71% of Gen Z adults are confident in their investing strategy, which is a higher percentage than the 70% average for all Americans. The youngest generation attributes its confidence to learning about investing in school.

Overall, 28% of Gen Z investors were taught about investing in school, compared to 19% of Millennials, 12% of Gen X, and 9% of Boomers. Further, 43% of Gen Z said they learned about investing at a young age, compared to 31% of Millennials, 26% of Gen X, and 18% of Baby Boomers.

Further evidence of the value of financial education is the finding that about half of all those surveyed who are not confident in their investment strategy say it is because they were not taught about investments at a young age by family or in school.

The survey also revealed that younger investors are more likely to invest in growth stocks, which is smart, considering they have a longer investment horizon. Specifically, 57% of Gen Z and 56% of Millennials are focused on growth investing, compared to 51% of Gen X and 48% of Boomers.

Also, 48% of Gen Z and 48% of Millennials use fractional shares investing, compared to 33% of Gen X and 25% of Boomers. This is probably because they have less capital to invest.

In addition, younger generations are far more likely to engage in socially responsible investing, as 43% of Gen Z and 45% of Millennials count themselves as socially responsible investors. Just 25% of Gen X and 17% of Boomers can say the same.

One notable outlier involving Gen X is that only 48% consider themselves buy-and-hold investors. That's compared to 60% of Boomers, 59% of Millennials, and 57% of Gen Z.

It is particularly encouraging that Americans are getting started earlier because time in the market is the single best way to build long-term wealth , thanks to the power of compound earnings.

Buying and holding good stocks or ETFs for 30 or 40 years can grow exponentially over time, even with a small initial investment and modest monthly contributions.

“The result of this engagement and access to investing education and resources is a more sophisticated, more knowledgeable, and most importantly, more financially confident population of American investors,” Rob Williams, Managing Director of Financial Planning at Charles Schwab, said.

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