FINRA and CFA Institute study Gen Z investing habits: social media, crypto, FOMO
“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.”
FINRA Investor Education Foundation (FINRA Foundation) and CFA Institute have released a new report, Gen Z and Investing: Social Media, Crypto, FOMO, and Family.
The report examines attitudes and behaviors around investing among two Gen Z segments (ages 18 to 25) in the United States—those with and those without any investment accounts—and compares them with their investing millennial and Gen X counterparts.
The report also profiles Gen Z investors in Canada, the United Kingdom and China and compares them with their counterparts in the United States.
“It is vital to understand their investing decisions”
Gerri Walsh, President of FINRA Foundation, said: “The Gen Z population is diverse and digitally savvy. They are using mobile technology to enter the financial markets in unprecedented numbers and consulting a wide range of information sources as they do so. It is vital to understand their investing decisions and to provide them with the educational tools to prepare for those decisions.”
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. Our study has underlined the extent to which 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.”
Key findings include:
- Despite their young age, a surprisingly large percentage of Gen Zs in the United States invest, with cryptocurrency as their top choice: Close to six in 10 (56 percent) report owning at least some investments. They primarily invest in cryptocurrency (55 percent) and individual stocks (41 percent). They are less likely than their older counterparts to use mutual funds and are more likely, along with millennials, to invest in crypto and non-fungible tokens compared with Gen Xers.
- Gen Z investors in the United States use a variety of resources to learn about investing: They learn about investing and finances primarily through social media (48 percent), internet searches (47 percent) and parents/family (45 percent). Their top online resource is YouTube (60 percent) followed by internet searches, Instagram, TikTok, Twitter, Reddit and Facebook.
- Gen Z investors in the United States are risk-takers: Almost half (46 percent) are willing to take substantial or above-average financial risks. Half (50 percent) say they have made an investment driven by their fear of missing out (FOMO).
- Barriers to investing: Gen Zs in the United States who are not yet investing cite lack of savings (65 percent), not having enough income/living paycheck-to-paycheck (64 percent) and lack of knowledge about investing (56 percent) as the primary reasons why.
- Like their counterparts in the United States, Gen Zs around the world are investing in large numbers: Among the countries covered by the study, Canada has the highest percentage of Gen Z investors, with nearly three-quarters (74 percent) saying they own at least one investment, compared to 56 percent in the United States, 49 percent in the United Kingdom and 57 percent in China.
