Experts say Gen Z has started saving and investing their money at a younger age compared to prior generations!
Gen Z – born between 1997 and 2012 – is beginning saving and investing much earlier than previous generations, which experts say is proving to be a significant advantage. According to the 2024 Schwab Modern Wealth survey, Gen Z adults started investing at an average age of 19. In comparison, baby boomers began at 35, and millennials started at 25. The survey, conducted in March, included 1,000 Americans aged 21 to 75.
“One of the magical qualities of investing is the power of time and compounding and starting early and starting small. Saving a dollar today and allowing it to grow and the earnings on that to compound over years increases significant wealth”, said Rob Williams, a certified financial planner and the managing director of financial planning at Charles Schwab.
Starting to invest early offers substantial financial benefits. For instance, a teenager who opens a retirement savings account could accumulate significantly more wealth than someone who begins saving in their twenties. Experts recommend young people open a Roth IRA (Individual Retirement Account), which allows after-tax contributions, offers tax-free growth, and tax-free withdrawals in retirement.
“Every young person, the minute they get their first job, should only be doing Roth IRAs if they qualify, or Roth 401(k)s. Get the vehicle, the receptacle, the Roth IRA set up and it’s more likely they’ll make it a habit for the rest of their lives as they see their account grow”, said Ed Slott, an IRA expert and certified public accountant.
Gen Z’s early interest in investing is bolstered by increased access to financial resources. The Schwab report notes that 28% of Gen Z learned about investing in school, compared to 19% of millennials and 12% of Gen X.
The survey also shows that most Americans are skeptical of financial influencers on social media. 76% of respondents don’t follow any finance influencers, and 65% say social media has no impact on their investments. The majority prefers consulting a financial advisor (57%) over social media platforms (42%) for financial advice.
“There’s a lot of information out there, but that does not equate to knowledge or context or sometimes the hype of certain parts of the markets that feel attractive, but may not be very good for your long-term investment health. It’s like being attracted to an ice cream cone versus, you know, the more boring balanced diet, to build wealth over time”, Williams said.