A recent survey conducted by U.S. Bank has provided insights into the investment preferences and attitudes of Generation Z (Gen Z). The study revealed that Gen Z is a generation driven by values and principles, but they face challenges when it comes to investing due to the complexities involved. The survey carried out between May 12-24, 2023, involved 3,000 active investors and 1,000 aspiring investors from various age groups.
One noteworthy finding is that 38% of Gen Z active investors define wealth as having a better quality of life. This indicates that they prioritize holistic well-being and personal fulfillment over purely financial gains. Moreover, a significant 65% of active Gen Z investors expressed their desire to invest in causes that align with their values. What sets Gen Z apart from older generations is that 85% of them are willing to accept returns that are significantly lower than the average return of the S&P 500 if it means supporting causes they care about. This indicates a willingness to sacrifice financial gains for the sake of social and environmental impact.
The economic climate has had a profound impact on investors, with 34% of respondents expressing increased pessimism about their investments' future compared to the previous year. Recent developments such as inflation, rising interest rates, and soaring costs have led to 79% of investors altering their investment strategies in the last three months. These challenges are further highlighted by stark statistics, including a 169% increase in college tuition since 1980, a 540% rise in the average home price, and an average student-loan debt of $37,000.
Another interesting aspect is the influence of social media on young investors, with over 75% of Gen Z believing that investing appears easy on social media platforms. However, despite this perception, 73% of Gen Z and 70% of Millennial investors feel uncertain about where and how to start their investment journey. This reveals a paradox between the apparent ease of investing portrayed on social media and the actual complexities faced by younger generations in the investment landscape.
When it comes to seeking financial advice, Gen Z shows greater trust in financial advisors, with 62% of respondents relying on them. Additionally, 50% seek advice from family members, and 36% turn to YouTube for financial guidance. It's also noteworthy that only 6% of all Gen Z investors do not compare their wealth and investment goals to those of others, in contrast to 26% of Gen X and 40% of Baby Boomers. This suggests that Gen Z is more influenced by others' investment choices and seeks validation through comparison.
Gunjan Kedia, vice chair of Wealth, Corporate, Commercial, and Institutional Banking at U.S. Bank, acknowledges the challenges faced by Gen Z in starting their investing journey. She emphasizes the importance of offering tailored financial guidance to help them navigate the unique economic landscape they encounter.
In conclusion, the U.S. Bank survey sheds light on the values-driven approach of Gen Z investors, who prioritize causes they care about over pure financial returns. However, they face challenges in starting their investment journey due to economic uncertainties and complexities. The survey underscores the need for targeted financial guidance to support Gen Z as they navigate the investment landscape and pursue their values-driven investment goals.