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Jun 02, 2021

Retail investors: Gen Z more cautious than millennials, shows new study

Nearly one in five Gen Z investors prefers cash over stocks as long-term investment, according to CreditDonkey survey

Gen Z investors are more cautious and more pessimistic than their millennial peers, according to a new survey.

A third of Gen Z invests aggressively, compared with 40 percent of millennials, according to a survey of more than 1,000 US retail investors by CreditDonkey.

Although many of these younger investors report low levels of confidence in their financial futures – only a quarter say they feel confident on this issue – more than half (53 percent) feel knowledgeable about investing, with many Gen Z adults (57 percent) having started investing between the ages of 18 and 24.

This compares with less than half (44 percent) of baby boomers who consider themselves knowledgeable about investing. Just 14 percent of millennials began investing before age 25, according to the survey – a figure that drops to 8 percent for baby boomers.

‘Gen Z has grown up with financial knowledge at its fingertips,’ says CreditDonkey. ‘Thanks to increased internet access and social media, Gen Z is able to learn and share knowledge more efficiently than previous generations.

‘But these young investors have come of age during uncertain times. They’ve seen the financial challenges millennials have faced. As a result, they’re more risk-averse despite having more time to invest and recoup any losses.’

The researchers report that while the oldest baby boomers started to reach retirement age in 2012, with ‘millions retiring every year... a surprising number of boomers are ill-prepared for their later years.’

Fourteen percent of baby boomers haven’t invested in the stock market at all, finds CreditDonkey, while two in five do not have a 401(k) and two thirds do not have an individual retirement account.

Numerous studies over the past year have pointed to an influx of millions of new retail investors since the start of the Covid-19 pandemic. IR Magazine’s own Retail Investors research report shows that nearly three in 10 companies have seen an increase in retail investment in the past 12 months, while more than a quarter have seen an increase from three years ago – with much of that focused on small-cap companies: 45 percent of small-cap firms report an increase in retail holdings over the last 12 months.

Garnet Roach

An award-winning journalist, Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of...