With money on their minds, Generation Z is ready to invest

With money on their minds, Generation Z is ready to invest
This generation is in the best position to invest in stocks because of their youth
JUL 25, 2018
While most members of Generation Z are still only teenagers, it's not too early for this young generation to start thinking about the stock market. Known for their frugality and tendency to stockpile cash for the future, the members of Generation Z are actually more informed about investing than their millennial counterparts. And with one eye on their future financials, Gen Zers are already thinking of ways to stretch every dollar earned and ways to save for retirement. But fear of the unknown, especially when money is involved, can keep even the most informed teenagers from pursuing the stock market. For a generation that prioritizes saving, the idea of spending cash to potentially earn cash later can seem counterintuitive. But in fact, just the opposite is true. Today's teenagers are in the best position to experiment with the stock market because of their youth, and they stand to benefit the most when they invest early on in their careers.

Planning for the future

Investing is all about committing money today with the expectation of gaining an additional income or profit at a later date. While millennials tend to be nearsighted in their spending habits, Gen Zers are more conservative about their spending. This extreme frugality and the drive to achieve their long-term financial goals is what makes members of Generation Z strong candidates to be successful investors. Teenagers prioritize tomorrow's financials over today's desires — an important attribute necessary for any investor looking to grow his or her portfolio. Generation Z is also the best prepared for the digitization of money management and financial services given their ability to navigate new technologies. Born after the mid-1990s, Generation Z grew up with the artificial intelligence and automation tools that power modern investing solutions but may make older generations wary. Baby boomers and Generation X, for example, might be less trusting of an automated solution like a robo-adviser, which uses computer algorithms to make investment decisions. But for those who trust computers to provide smart financial advice, like a Gen Zer, a robo-adviser is a convenient, low-cost tool to assist with basic investing. (More: Gen Z concerns over finances on the rise, survey shows) The whole point of investing is to work smarter, not harder — and for Generation Z, it also represents an opportunity to get ahead in their goal of saving for retirement. A hands-on experience and real-time feedback are key for beginning teenage investors From streamable webinars to social media sites, it's easier than ever for inexperienced consumers to try their hand at navigating the stock market. For Gen Zers specifically, consider leveraging tools and resources that offer hands-on teaching experiences, such as: 1. Online forums and discussion boards. For novice investors, it's helpful to learn from experienced consumers who already have skin in the game. Forums are an excellent source of information coming from people who have tried a variety of investing techniques and can speak to what works and what doesn't. These discussion boards also allow beginners to ask other forum participants questions, perfect for Gen Zers who want prefer learning in a collaborative environment and enjoy knowledge sharing with their peers. 2. Gamified investment platforms. Instead of going straight to the stock market, teenagers can turn to gamified investing tools to learn the ins and outs of investing without the risk. Games are also much better at simulating a real-life trading experience than a textbook or online training course, giving Gen Zers a feel for what investing is actually like. And with many investment games available on mobile platforms, Generation Z can easily access their training materials straight from their smartphones when they're on the move. 3. Micro-investing applications. Frugal teenagers don't want to put all of their eggs in one basket — but with micro-investing tools, Gen Zers can get started with as little as a few dollars at a time. Mobile applications like Acorns and Robinhood make it easier than ever for people to invest on the go, and they let consumers bypass the usual brokerage account minimums. This eliminates a previously expensive barrier to entry, and makes investing more accessible to younger audiences who are interested but worry about losing their savings with one bad investment. Once considered an activity reserved for wealthy adults, investing is making its presence known among the youngest cohort of Americans thanks to new learning applications and a number of free online resources. By starting small and engaging with other experienced investors, Gen Zers can strengthen their money management skills and achieve their financial goals in no time. (More: A millennial's perspective: The frustrating misconception advisers have about building a Next Gen value proposition) Andrew Kirillov is CFO and co-founder of TradingView.

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