Let's face it: younger generations – especially Gen Z adults (born after 1996) – have adopted a whole new investment strategy. As digital natives, Generation Z is the first generation to gain access to technology that allows them to invest early and with a community.
Generation Z doesready to grow annuallyalso, meaning it's only a matter of time before they conquer the market. As mentioned in our recently publishedApex Next Investor Outlook Second Quarter 2022 Report, which focuses on the rising demographics of Generation Z and Millennials, is expected to transfer nearly $70 trillion in wealth from baby boomers to younger generations, including Millennials and Generation Z, over the next 25 years (Cerulli employees).
Major investment actions and important financial decisions by Generation Z and Millennials will influence the economy of future generations. These population groups learn from older generations and encourage new investment habits. From creating different types of different investment portfolios to using social media to conduct investment research.
Social scientists
Armed with new and emerging technology, younger generations are turning to social media and peers to make investment decisions. Connor Coughlin, General Manager Fintech at Apex Fintech Solutions, recently discussed thisNasdaq Trade Talksappearance. “The way younger generations protect their investment information is changing, and the resources for doing so have evolved,” Coughlin said. "But the content and information are the same; it's just presented in new ways."
According toNasdaqGeneration Z spends more time researching an investment before buying or selling compared to older generations: 40% spend at least one hour but less than a day, 30% spend at least a day but less than a week, and only 3 % do not investigate this at all. This time is also not spent 'judgmentally scrolling' through news stories and graphs: Generation Z can take action with data and insights from social media. According to a study byM1 FinanceNearly 60% of Gen Z and Millennial investors have invested through social media.
Millennials, on the other hand, use social media to research economies abroad.Our surveyfound that millennials are embracing China's increasingly dominant economy and investing heavily in major Chinese companies such as Alibaba, TAL Education Group ($TAL), JD.com ($JD), and Ctrip ($CTRP).
What does this mean:Social media platforms are much more than viral cat videos and political shenanigans; they help influence investment decisions and play a key role in financial literacy, community building and advice with growing research and education on these platforms.
Investing in dividends as a safe haven
Seeking a safe haven amid stormy markets, Gen Z is embracing the stability of dividend stocks over the dynamic market moves of growth stocks. The reduced volatility of dividend stocks can be particularly significant during major market swings.
According toour reportThis population invests in well-known, income-generating companies, including Walmart, Verizon and Home Depot. Major food and beverage companies such as McDonald's and PepsiCo performed well, and natural gas distributors offered healthy dividend yields at Enterprise Products Partners.
What does this mean:With youth on their side, Generation Z can generate much higher returns with dividends than those who start investing later in life. This means that dividends must be invested on an ongoing basis. Armed with more research, we predict that Generation Z will focus on building long-term portfolios around consistent, high-performing companies.
They love technology and sustainability
Compared to other generations, Generation Z is more likely to invest in companies with a positive environmental impact or social causes they care about. Our findings support the idea that young people are eager to invest in companies that align with their values, with younger generations investing in Beyond Meat ($BYND) and Tesla.
Millennials and Gen Zers are also increasingly interested in ESG investing, which takes environmental, social and governance factors into account.according to Nasdaq.. These investments allow this population to align values with their investment portfolios.
As social media researchers, Gen Z investors responded enthusiastically to Elon Musk's proposed acquisition of Twitter. According toour reportThe response was mostly positive, putting Twitter at the top of our list of stocks Gen Z is investing in. Gen Z support for Tesla also remained strong: according to our report, the electric car maker retained the number 1 position and increased its ranking among Gen Z by 5% in Q2 vs. 1. quarter.
What does this mean:We expect Generation Z will continue to invest in ethical organizations that align with their moral compass, amid growing concerns about the environment and sustainability. This can of course fluctuate depending on external forces such as politics, the environment and current events. Furthermore, as the first generation to witness the real-world impact of new technology, we expect Generation Z to continue investing in companies that benefit people as a whole.
Examining the behavior of Gen Z investors helps prepare for the future
As the first generation of digital natives, Gen Zinvestorswill have major consequences for the economy as the population grows. Generation Z is less likely to engage in risky behavior than previous generations, preferring stability and historically sound investments over volatility.
By examining these habits, we can use this information to predict trends and cater to a growing generation that will soon make the big decisions that will impact the world as a whole. While financial access and literacy may be greater than ever, at Apex Fintech Solutions our mission is to advance this access for all generations through education and breakthrough technology. We believe that everyone should have access to the financial markets, and we develop the tools that promote financial freedom.
Conclusion
As the first generation of digital natives, Generation Z's investment habits will have a significant impact on the economy as the population grows. Generation Z is less likely to engage in risky behavior than previous generations, preferring stability and historically sound investments over volatility.
By examining these habits, we can use this information to predict trends and cater to a growing generation that will soon make the big decisions that will impact the world as a whole. While financial access and literacy may be greater than ever, at Apex Fintech Solutions our mission is to advance this access for all generations through education and breakthrough technology. We believe that everyone should have access to the financial markets, and we develop the tools that promote financial freedom.
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We recently released our Apex Next Investor Outlook for the second quarter of 2022. The report, which analyzes proprietary data from US investors on the Apex Clearing platform, highlights the top 100 stocks held by investors as of June 30, 2022, with a particular focus on the emerging Gen Z demographic.
Read the reporther.
