More than four in five members of Generation Z have already started investing by the time they turned 21, according to new data from the CFA Institute and the Financial Industry Regulatory Authority Investor Education Foundation.
The survey, which questioned Gen Z British, American, Canadian, and Chinese investors, revealed that almost half of those in Britain said they owned at least one investment.
Fear of missing out, or "Fomo", had pushed 43 per cent of the surveyed 18-25 year olds to start investing but only 15 per cent used finance professionals.
The survey showed accessing financial information on social media, as well as new investing apps and cryptocurrencies, were important factors in Gen Z’s decision to invest.
Social media in particular emerged as an important factor: almost half of Gen Z used it to source information around investments but only 13 per cent said they actually trusted what they read there.
The plethora of information is wider ranging than it's ever been. The caveat being, it's also more difficult to know what to trust.Tim Morris, Russell & CoTim Morris, an adviser with Russell & Co, said: “The plethora of information is wider ranging than it's ever been. The caveat being, it's also more difficult to know what to trust.
“This ranges from cryptomania Fomo, where we saw early adopters make a lot of money and many more lose money; to meme stocks, where we saw collective action largely prevail during the pandemic; to the endless number of financial influencers such fads have spawned all over social media.
“Regardless, if they are only investing what they can afford to lose - especially with the ongoing cost-of-living crisis - it should prove a learning curve for many.”
But the top barrier for Gen Zs in the UK was not having enough income or living pay cheque to pay cheque.
Research from Charles Schwab earlier this month showed young investors were being discouraged from investing by the cost-of-living crisis. Almost three quarters (73 per cent) are unsure how to adapt their investment strategies to protect against losses in the current financial climate.
The goal for young British investors was to buy a home, while investors from the US and Canada said their aim was having enough money to travel.
Paul Andrews, managing director for research, advocacy and standards at CFA Institute, said: "These new entrants to the world of investing are reshaping investment practices, products, and platforms.
“Their investment habits differ significantly from their predecessor investor cohorts. A range of macroeconomic and social factors such as rising inflation, the growing popularity and accessibility of cryptocurrency, and social media ‘finfluencers’ are having a profound impact on how, where and what they invest in.”
ellesheva.kissin@ft.com
