As the torch passes from millennials to Gen Z, the world of investing is witnessing a seismic shift. With a keen eye for financial independence and a penchant for innovation, Gen Z is revolutionising the way we think about wealth planning.
Here are some trends and investment tips tailored to Gen Z’s unique needs, helping them navigate their investment journey and accumulate wealth while staying ahead of the curve.
Gen Z is entering the world of investment at a younger age, giving them a significant edge. Starting early allows them to benefit from the power of compounding, potentially accumulating substantial wealth over time. On average, Gen Z investors begin their investment journey earlier than millennials, often as young as 18.
With fewer financial responsibilities in the early stages of their careers, this new generation tends to lean towards speculative investing. While adopting an aggressive investment approach can be beneficial, Gen Z investors must also know when to adjust their strategy to mitigate unnecessary risks.
Diversify your portfolio
While stocks and bonds remain popular, Gen Z investors are increasingly exploring alternative investment options such as cryptocurrencies, NFTs, and real estate investment trusts (REITs). Diversifying your portfolio can help spread risk and potentially increase returns, providing an advantage in today’s rapidly changing financial landscape.
Data shows that 55% of Gen Z invest in cryptocurrencies, 41% in stocks, and 25% in NFTs. Most tend to avoid real estate avenues due to perceived high entry costs. However, understanding both traditional and new investment instruments is essential. Gen Z investors should prioritize educating themselves about different investment instruments and strategies to assess their suitability, scope, and limitations before investing.
V.L.A. Ambala, Research Analyst, Co-founder – Stock Market Today, says, “The propensity for goal-based investing is low among young investors, which could hamper their wealth accumulation. To overcome this lag, I recommend investing in mutual fund schemes through the SIP route to develop a disciplined approach towards investment and goal-based investments.”
Educate yourself
With a plethora of information available online, there’s never been a better time to educate yourself about investing. Take advantage of online resources, podcasts, and educational platforms to enhance your financial literacy. Understanding different investment vehicles, risk factors, and potential returns will empower you to make informed investment decisions.
Set clear financial goals
Approach your investment journey with clear, achievable financial goals in mind. Whether it’s saving for a house, funding your education, or planning for retirement, setting specific goals will help you stay focused and motivated. Having a roadmap for your financial future will guide your investment decisions and keep you on track to achieve your objectives.
Avoid fads, focus on fundamentals
While it’s tempting to chase the latest investment trends and internet fads, it’s essential to focus on the fundamentals of investing. Avoid making impulsive decisions based on market hype. Instead, adopt a disciplined and goal-based investment approach. Remember, wealth accumulation is a marathon, not a sprint.
Seek professional advice when needed
If you’re unsure about where to start or need guidance with your investment strategy, don’t hesitate to seek professional advice. A financial advisor can help you develop a personalised investment plan tailored to your financial goals and risk tolerance.
“Instead of chasing trends, I encourage focusing on key fundamentals such as the company’s financial standing, record of returns, business model, risk management strategy, and growth prospects before investing. They must also learn to reject social media advice and seek the help of professionals to avail proper financial guidance. This is crucial because, today, nearly 30% of Gen Z investors avail of investment suggestions from financial influencers who are often not qualified to advise, in turn, exposing themselves to risk,” Ambala added.
By following these tips and staying disciplined, Gen Z investors can navigate their investment journey with confidence, turbocharging their wealth planning and securing a brighter financial future. It’s time to embrace the opportunities of tomorrow and build the wealth of a lifetime.
