Not surprisingly, there are noteworthy differences in the types of investments preferred by investors across the generations. For one thing, Nasdaq research shows that ETFs have quickly become the fund structure of choice among younger investors, with 75% of Gen Z and 81% of Millennial investors holding ETFs in their retirement accounts, compared to just 60% of Baby Boomers.
Generational differences are even more apparent when looking at which investment sectors are of interest to people. As the table below shows, there is growing interest in funds that are focused on cryptocurrencies among all age groups, but younger investors express the highest overall interest. The same is true regarding interest in Fintech-, AI-, and gaming-related funds, although interest in fintech and AI remains high a bit further along the age spectrum and already-low interest in the gaming space among Baby Boomers dropped further from 2023 to 2024.
Gen Z (1997-2012) | Millennials (1981-1996) | Gen X (1965-1980) | Baby Boomers (1946-1964) | |||||
2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | |
Crypto/Digital Assets | 26% | 59% | 30% | 57% | 21% | 36% | 7% | 13% |
Fintech | 28% | 45% | 34% | 52% | 37% | 48% | 35% | 38% |
AI and Machine Learning | 22% | 41% | 20% | 45% | 29% | 45% | 17% | 33% |
Gaming | 18% | 42% | 23% | 31% | 13% | 18% | 6% | 3% |
Also of note, about 25% of Gen Z, Millennial, and Gen X investors, and even 20% of Baby Boomer investors, say they are interested in private equity funds. Private equity and cryptocurrency funds are likely to show up in 401(k) plans soon, as President Trump signed an executive order opening the door for several such “alternative assets” to be offered within workplace retirement plans.
As I said earlier, generational differences in investment preferences are not surprising. One watch-out for younger investors, though, is where they are turning for financial guidance. A Bankrate survey found that 76% of Gen Z and 65% of Millennial investors look to social media for financial advice. Still, “family and friends” ranks first as the place people turn for financial advice.
If you have influence over a younger investor, remind them that certain investing principles apply no matter how old you are or what sectors are of particular interest, including:
Know what you’re investing for and your time frame. SMI generally recommends only investing money that you won’t need for at least five years.
Instead of moving too quickly toward choosing what to invest in, choose an objective, process-driven investment strategy and let it tell you what to invest in.
Know what you’re investing in. If you’re interested in cryptocurrencies, you should be able to explain how they work.
Make sure your portfolio is adequately diversified (Ecclesiastes 11:2).
Take a slow and steady approach to building wealth, choosing to be a long-term investor rather than a short-term trader, and steering clear of any attempts to get rich quick (1 Timothy 6:10).
At a time when newer brokers are doing what they can to “gamify” investing, we would all be wise to remember that building wealth should be a bit boring. As Proverbs 21:5 (TLB) says, “Steady plodding brings prosperity; hasty speculation brings poverty.”
