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Research suggests investing is popular among those born in the late 1990s to the early 2010s – otherwise known as ‘Generation Z’.
But interestingly, it appears as though this generation isn’t overly interested in buying a typical FTSE 100 tracker fund, or investing in blue chips.
In this article, we’re going to take a look at three alternative investments that are popular among Gen Z right now, and explore whether buying non-traditional assets could be a good way to add some diversity to your portfolio.
Keep on reading for all the details or click on a link to head straight to a section…
According to Morning Consult, 36% of Gen-Zers own at least one investment product.
At first glance, this may seem a rather low percentage when we consider that nearly half (46%) of all adults invest. However, this figure is clearly skewed by the older generations. For example, the same research revealed that half of the Gen X generation and 52% of Boomers have investments and we probably shouldn’t be too surprised by this. Older generations have, of course, had much longer to attain and invest their wealth.
So, taking this into account, when we consider that over a third of Gen Z invest, we know that a large chunk of this generation has an appetite for buying assets. In other words, Gen Z are seemingly are turning their noses up at traditional savings accounts and – given the dire rates we’ve seen over the past few years – who can honestly blame them?!
Interestingly, the same research revealed that Gen Z investors like to keep a close eye on their investments.
That’s because a massive 40% of Gen Z investors are said to check their investments on a daily basis, compared to 28% of all adult investors. This statistic tells us that many Gen Z investors prefer an active investing style.
Gold, cryptocurrency, and meme stocks are all investments popular with Gen Z right now. Let’s take a closer look at these assets…
According to the Royal Mint, gold purchases were up by 26% in 2022.
Its research also revealed that Gen Z investors have been particularly fond of the precious metal over the past year or so. The volume of gold purchases among Gen Z’ers rose by 38% in 2022.
Clearly gold is holding on to its reputation for being a safe asset class during times of economic uncertainty. And despite gold being one of the earliest forms of wealth known to man, it’s very likely that it will continue to be a popular asset to hold for generations to come. After all, there are now several ways that investors can gain exposure gold, and the days of storing bullion in your own bank vault are now long gone!
For example, Tally Money is the world’s first non-fiat currency to be accessible in individual accounts. This means you can essentially gain exposure to gold and keep it in an account resembling a normal bank account. Meanwhile, the Royal Mint now offers ‘DigiGold’, which makes it possible to buy physical gold at the touch of a button. (Any gold you buy is stored securely for you.)
We also shouldn’t forget about the multiple exchange-traded commodities (ETC) out there which can track the price of precious metals, including gold. The Xtrackers IE Physical Gold ETC Securities, and the iShares Physical Gold ETC are two popular Gold ETCs.
For more ways on how to invest in gold, see our complete guide to investing in solid gold.
Gen Z are seemingly embracing cryptocurrency like there’s no tomorrow. An estimated 12% of this group now invest in crypto, which is quite a stat when you consider digital coins have been around for barely a decade. In comparison, just 5% of baby boomers hold crypto.
There’s no doubt that the ‘high risk, high reward’ nature of crypto is attractive to many Gen Z’ers, especially because we’ve all seen how volatile some of the most popular currencies can be. For example, Bitcoin – the most well-known cryptocurrency – has seen its price rise by over 75%(!) since the year began. Similarly, Ethereum has enjoyed a 65% rise since January 1, while Cardano has risen 70% over the same period.
Aside from the potential rewards, it’s probable that many Gen Z’ers are turning to crypto to combat high inflation, and central bank quantitative easing policies.
This is worth mentioning as many of the most popular digital coins, including Bitcoin, are decentralised. This means that more of them can’t be created out of thin air. This isn’t the case with fiat currency, as money can – and often is – be printed at will by central banks.
‘Meme’ stocks are refer to investments that have gained significant attention and popularity among a large online community of investors. For example, viral social media posts are often where Meme stocks are born!
Meme stocks are often volatile because they’re typically driven by hype and social sentiment as opposed to the underlying fundamentals of a particular company.
GameStop (GME) is perhaps the best example of a Meme stock. In 2021 its share price rose 400% in a single week following a campaign from the online Reddit community, Wall Street Bets, which encouraged investors to buy the stock to force professional short sellers to cover their positions at a huge loss.
Other meme stocks in recent years have included AMC Entertainment (AMC), BlackBerry (BB), Nokia (NOK), Tesla (TSLA), Virgin Galactic (SPCE), and Coinbase (COIN) to name a few.
We perhaps shouldn’t be surprised that Gen Z are one of the biggest groups who like to buy meme stocks given this group’s enthusiasm for 0% commission trading apps, which have exploded in recent years.
Also, we shouldn’t forget that Gen Z were the first generation to grow up with the world wide web, which explains why Gen Z are so highly represented in various online communities promoting meme stocks.
There’s also trust at play here too. According to a survey by CreditCards.com, Gen Z investors were nearly five times as likely to report that they get financial advice from social media compared to other groups. This is clearly another major reason why Gen Z are presumably happy to take a punt on meme stocks.
It’s really important to note that investing in traditional tocks and shares isn’t the only way to grow your wealth. In fact, here at Money Magpie we’ve written a whole article on investing in alternative assets – from antiques to art to sneakers!
So, all things considered, there really is nothing wrong with an appetite for investing in alternative assets.
However, if you’re looking to add some gold, cryptocurrency, or even meme stocks to your portfolio, it’s really important that you get your head around the risks associated of these types of investments.
For instance, while gold may be considered a ‘safe haven’ by many, there are no guarantees the precious metal will be able to combat the impact of rising inflation and economic turmoil in the future – especially in the short term.
Meanwhile, cryptocurrency is notoriously volatile. While big gains are certainly possible, any crypto investor must also be prepared to suffer big losses.
Similarly, Meme stocks are best suited to those who enjoy the rollercoaster ride of price fluctuations. To put it another way, investing in meme stocks certainly isn’t for the faint of heart.
So, while there’s nothing wrong with investing in non-traditional assets always ensure you do your homework, and understand the risks of every asset you invest in. If you want to buy alternative assets, you may wish to do so as part of a diversified portfolio in order to minimise risks.
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Disclaimer: MoneyMagpie is not a licensed financial advisor. Information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This isn’t financial advice. Anyone thinking of investing should conduct their own due diligence.
Cryptoassets are highly volatile and unregulated in the UK. No consumer protection. Tax on profits may apply.