Here’s How Every Generation Invests — Is Your Future Financially Secure?
Written by
Chris Adam
Edited by
Cory Dudak
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If you have multiple investors in your family, and particularly if you’re of different generations, it may be interesting to compare your strategies. Since you’re at different stages of life, it makes sense that your goals and strategies may be different.
GOBankingRates looked at the Charles Schwab Modern Wealth survey of 1,000 U.S. adults, which was updated in March. Per the survey, each generation has their own mix of investment strategies, with younger generations more open to trying a variety of techniques.
Here’s a look at what the survey showed for how each generation invests. It may be helpful to see how you compare.
Baby Boomers
Americans of all generations mostly rely on the buy and hold strategy. However, baby boomers (60%) rely on this strategy the most.
With the buy and hold strategy, investors purchase stocks or assets to keep them long-term. That means even through short-term market ups and downs.
Nearly half of boomers (49%) rely on the growth investment strategy, where they invest in companies predicted to grow at an above-average rate.
Gen X
For Gen X investors, growth investment is the most popular strategy (51%). The buy and hold strategy is the second most popular (48%) with Gen X.
Given they are younger, it makes sense that Gen X investors would rely a bit more on the growth investment strategy than their boomer counterparts.
Millennials
For millennial investors, the buy and hold (59%) and growth investment (56%) strategies are also among the most popular.
“Across the board, younger generations tend to adopt a wider range of investing strategies than older generations,” according to Visual Capitalist. “Specifically, Gen Z and millennials tend to use newer investing strategies more often, including fractional shares investing (48% for both) and short-term trading (52% for both).”
Fractional shares investing allows investors to buy expensive stocks with less money since they only purchase a portion of a full share. With short-term trading, an investor buys and sells assets quickly — maybe within days or weeks — to take advantage of short-term movements in the market.
Gen Z
This may be no surprise: Gen Z and millennial investors tend to use technology-driven strategies much more than older generations. That includes robo-advisor investing, which uses online investing platforms with algorithms to manage investment portfolios.
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These younger generations of investors are also increasingly using social media to help inform their financial choices. Further, Gen Zs are looking to invest earlier. On average, they started investing at age 19, compared to 25 for millennials, 32 for Gen X and 35 for boomers, per Charles Schwab. Financial advisors may celebrate these statistics because investing earlier allows more time for wealth to grow with compounding interest.
Direct indexing is another method mentioned in the survey. With this one, investors buy and own individual stocks of an index rather than using a mutual fund. Younger investors are also interested in socially responsible investing, where they look at specific ethical, social or environmental criteria for the companies they invest in through their finances.
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