30% of GenZ begin investing in university, early adulthood: WEF

There has been a significant shift in the retail investment landscape when it comes to younger investors as compared to experienced ones. The report shows that younger investors have begun investing earlier than the previous generations.

According to the World Economic Forum’s Global Retail Investor Outlook 2024 that covered 13 economies, 30 per cent of Gen Z begin investing in early adulthood, compared to just 9 per cent of Gen X, 6 per cent of Baby Boomers and 15 per cent Millennials. By workforce entry, 86 per cent of Gen Z acquire knowledge of personal investing as against 47 per cent of Boomers, highlighting a sweeping generational shift in financial habits.

Developed with Robinhood Markets and Boston Consulting Group, the research underscores the openness of younger generations to technological advancements in finance. Notably, 41 per cent of Gen Z and Millennials are willing to rely on AI for investment management, compared to only 14 per cent of Baby Boomers.

Cryptocurrency is perceived as more comprehensible than traditional investments such as ETFs, mutual funds, bonds, and stocks by younger investors, with over half of those under 44 allocating a third of their portfolios to it. While 29 per cent avoid stocks due to a lack of understanding, only 24 per cent say the same about crypto.

The study also highlights a shift in financial priorities, with 51 per cent of investors in 2024 prioritising emergency savings, up from 41 per cent in 2022. Concurrently, the focus on retirement has declined, from 48 per cent to 42 per cent. Lack of funds and fear of financial loss remain major barriers for non-investors, with over half stating they would feel more confident if investing was taught in primary school.

“Innovative financial advisory tools, such as AI-enabled products, could fill the gaps where traditional financial advisory may be too expensive or out of reach,” stated Stephanie Guild, CFA, Senior Director at Robinhood.

Leveraging technology is seen as a way to enhance affordability and accessibility, making financial advice more inclusive and empowering retail investors to participate in markets with greater confidence.

Dean Frankle, Managing Director at BCG, emphasised that “individual participation in capital markets has the potential to enable long-term financial well-being.” The report suggests creating financial products that cater to individual investors, addressing barriers like uncertainty and market volatility, and implementing policies that equip investors with necessary tools for safe market navigation.