Investing in 2023 A comprehensive guide for Gen Z investors (2024)

Companies like cryptocurrency, blockchain and meme stocks have presented many new opportunities for investors in 2023.With this in mind the team will do soSaxdecided to analyze research data from The Motley Fool and Bank of America and report data from Draper's Annual Consumer Research report and the Remake Fashion Accountability report to learn more about Gen Z's spending and investing habits.

The data showed that stocks (60%) were the most common investment type for Gen Z, and when looking at types, growth stocks (59%) and value stocks (57%) were typically their favorite stock types. While the overall cryptocurrency market suffered in 2022, crypto was the second most common type of investment. In fact, 54% of Gen Z said they have invested in cryptocurrency.

The data also explored the top barriers holding investors back, with 59% of Gen Z investors claiming the cost of living crisis is the main holding back and 20% finding investing risky. Additionally, nearly half (45%) say they do not have sufficient financial resources, while 39% blame the U.S. economy.

Gen Z investment habits

Gen Z often claims to be environmentally conscious on social media, but the evidence shows that this is not a priority when it comes to investing. The results showed that Generation Z is less interested in quality, price and convenience than millennials, but places more value on brand name and ability to resell.

Overall, Gen Z wants to invest and make smart choices in their investments to ensure long-term success and prepare for their future. When making investment decisions, some do not look at macro trends and have no retirement plans. Only 29% of respondents have a retirement account, indicating that Generation Z is less willing or less able to create one.

The data shows that at least 8% of Gen Z respondents borrow and invest at the same time. When it comes to paying off debt, more than 50% of Gen Z would rather sacrifice chocolate and pizza for a year than babysitting for a week or giving up their phone for a month to pay off debt.

Peter Siks, investor coach at Saxo, suggests that Generation Z is missing out on an important asset:

“When making investment decisions, Gen Z should make sure they are aware of the differences between returns on stocks (about 9% for the S&P 500) and savings (about 3%) over the long term.”

The importance of ESG factors in investment choices

When making purchasing decisions, Gen Z investors rank Environment, Society and Governance (ESG) qualities high on their list of considerations, with ovhalf (51%) say ethical trading, equality, diversity and a brand's environmental sustainability have become increasingly a factor in the way they buy clothing, accessories and shoes over the past twelve months. ISLANDMore than a third (46%) of Gen Z said they had given up or decided on a fashion purchase because they felt the brand or retailer did not reflect their values ​​of sustainability, ethics, equality or diversity. This 51% of Gen Z surpasses the 26% of Millennials who admitted they would not pay more for sustainable and ethical clothing, accessories or shoes.

However, environmental and ethical sustainability are not a high priority for Gen Z investors. In fact, they only rank sixth and seventh when it comes to style, quality, convenience and speed.

When we look at ESG factors and investments, Peter Siks says:

“The difficult thing about ESG investing is assessing the degree of sustainability of that investment. Simply put: there are traditional investments, light green, green and dark green (impact investments) investments.

“The lack of ESG-safe investments has to do with the lack of a clear choice between a traditional investment (in aETF) versus the sustainable alternative.

“Gen Z will discover that the more sustainable will yield the same returns as the traditional. The intention is there, but in the implementation there is no clear choice when you compare the 2 alternatives."

What's next? The future of investments

By the end of 2022, nearly half (44%) of Gen Z who were not investing said they were unable to do so due to limited resources.

When choosing investments, Gen Z investors are taking a low-risk approach by prioritizing long-term gains over short-term gains. Currently, the most common investment sector is the financial sector (39%), with real estate (37%) and high-tech/new technology (37%) coming in second and third respectively.

Siks focuses on the future of investing: “In predicting long-term macro trends, even the brightest minds have failed. It is therefore wise to bet on a macro trend with a limited amount of money.

“Boring long-term investing is the new sexy, and after using this insight, they will thank themselves in retirement. This also applies if small amounts are invested monthly: 35 years at €100 per month and an average return of 7% will earn $172,000 (not adjusted for inflation and before taxes).

Methodical

Repeat report:Remake Fashion Accountability-rapport 2022

Drapers rapport:The Gen Z and Millennials 2022 report

Data was collected from the source links above, cleaned and analyzed. The results were used as the basis for our campaign aimed at providing investment advice/tips for Generation Z for 2023. Data accurate as of December 2022.