New data from the CFA Institute and the Financial Industry Regulatory Authority Investor Education Foundation reveals that an overwhelming majority of Generation Z members have already begun investing by the time they reach the age of 21.
This survey encompassed Gen Z investors from the United Kingdom, United States, Canada, and China, highlighting some interesting trends.
Among British respondents, nearly half reported owning at least one investment.
The driving force behind this surge in young investors was the fear of missing out, commonly known as “FOMO.” 43% of the surveyed individuals aged 18 to 25 admitted that FOMO motivated them to start investing.
However, it is important to note that only 15% of these young investors sought the assistance of finance professionals.
The study also shed light on the significant role that social media plays in the investment decisions of Generation Z.
Nearly half of the respondents used social media platforms to gather investment information.
However, only 13% expressed trust in the content they encountered.
The survey results indicate that various factors, such as access to financial information on social media, the emergence of new investing apps, and the popularity of cryptocurrencies influence Gen Z’s investment choices.
These trends reflect the changing landscape of investment practices, products, and platforms.
Despite their enthusiasm for investing, young British investors face particular challenges. The primary barrier identified by Gen Z in the UK is a lack of income, with many living paychecks to paycheck.
Research by Charles Schwab corroborated this finding, revealing that nearly three-quarters (73%) of young investors are unsure about adapting their investment strategies to protect against potential losses in the current financial climate.
The investment goals of Gen Z differ among regions. For young British investors, the primary objective is homeownership, while their American and Canadian counterparts prioritise accumulating enough funds for travel.
Paul Andrews, the managing director for research, advocacy, and standards at CFA Institute, highlighted the transformative impact of these young investors on investment practices.
Andrews stated, “These new entrants to the world of investing are reshaping investment practices, products, and platforms. Their investment habits differ significantly from their predecessor investor cohorts.”
The survey results underscore the need for effective financial education and guidance tailored to Generation Z’s unique circumstances and preferences.
As these young investors continue to shape the investment landscape, it is crucial to provide them with the knowledge and tools to make informed decisions while navigating the complexities of the financial world.