Written by Alicia Otto

Currently, Gen Zers (born between 1997 and 2012) are on the cusp or in the middle of finishing their formal education and entering the workforce. Recent research indicates they will become America’s largest generation by 2034. Dubbed the first generation of digital natives, Gen Z investing will look very different from past generations’ experiences.

For one thing, the context is different. We’re living in a post-pandemic world where living costs are skyrocketing. While saving money is important, those who want to take their financial journey a step further look at investing as building on existing wealth and potentially outpacing inflation, especially in these turbulent times.

Another reason is that Gen Zers have access to a plethora of information on investing. As we’ve previously explored in a post about Gen Z & financial education, this generation has more opportunities to access financial education than previous generations thanks to continuous digital advancements. Coupled with a higher statistic of college-educated parents for financial advice and wealth transfer, Gen Z is a rapidly growing investing force. Investments, when studied and done right, can help this generation build their finances somewhat passively.

In today’s post, we’ll go over some of the reasons Gen Z should begin investing as early as possible:

Pay Off Student Loans

Student loan debt has plagued generations well before Gen Z. A feature on investing in college by Maryville University notes that there are more than 45 million borrowers across the country, generating a record $1.6 trillion in student loan debt. Some data also points out that 20% of students who still owed money were behind on payments. As such, investing early can help Gen Z build up their savings to help alleviate future costs in addition to what they’ll owe by the time they finish college.

You can start by investing for as low as $10 or $20 weekly. With the ever-increasing digital and mobile banking options today, you can set up automated savings to help stick to a budget and maintain consistent investments. Whether you look into index funds or setting up IRA accounts, a general rule of thumb for investing is to start as early as possible to use compounding interests and start financial growth sooner.

Achieve Financial Freedom

For most people, the main motivation for looking into profitable investments is to achieve financial freedom as early in their lives as possible. Newer generations want to retire earlier than their predecessors, but are impacted by rising inflation costs and a general disinterest in milestones such as home ownership and getting married. Insights from Forbes highlight that financial freedom means different things to different people. What matters is that you take the measures necessary to get out of, or prevent, financial imprisonment.

For Gen Z, investing early can include obtaining job security so that they can build capital to start more significant investments that will reduce financial anxiety in the future. Of course, it’s important to note that achieving financial freedom falls onto other measures aside from investing, like smarter saving, budgeting, and equity.

Maximize Investment Opportunities

Gen Z may have learning, investing, saving, and spending advantages due to many generational factors; undoubtedly, the high digital literacy rate has become a significant aspect of their financial education. However, the state of the world — from economic uncertainties to constant inflations — can always affect their success. Mixed with an overall low financial literacy rate in the country, Gen Zers are faced with financial anxiety about whether or not they are making the right calls. And while social media can be a valuable source of information and advice, the overwhelming accessibility of these platforms makes it so that the information isn’t always verifiable or reliable.

Another aspect boosting the generation’s digital and financial literacy, aside from social media, is the rise of accessible digital-only banking. Research from Institut Teknologi Bandung published in the Journal of Innovation & Knowledge on digital-only banking experiences indicates a distinct banking experience that is different from online and mobile banking alternatives. Because digital-only banking relies on the “bank” in question being branchless, it has become a popular alternative for people in search of more convenient and faster banking services while offering a wider catalog of banking products like flexible savings, virtual credit cards, and of course — investments.

The ease with which digitally literate savers can start investing their money is key to starting their investment journey early. Essentially, not only are Gen Zers learning and accessing financial advice younger and faster than their predecessors, but they are also able to practice what they are taught much earlier, granted they have the capital. With the rise of assets such as cryptocurrency, Gen Z has been gifted a chance to explore investment alternatives that are uncharted territory to their parents. With their higher sense of social responsibility, Gen Z — and maybe even those after them — can benefit from starting their investment journey early.

Content intended only for the use of zogo.com

Written by Alicia Otto