Generation Z investors are more affected by rising inflation and higher interest rates than older generations. But passive investing is better than active trading, says one analyst. Getty Images
According to a Bankrate survey, Gen Z is outperforming all other age groups when it comes to active stock trading.
However, a Bankrate analyst says they should become more passive investors.
Gen Z investors aren’t simply pulling out of the market either. They are also more willing to buy stocks than other groups.
This is a machine translation of an article by our US colleagues at Insider. It was automatically translated and checked by a real editor. We welcome feedback at the end of the article.
In a year marked by high inflation and high interest rates, Generation Z has emerged as the group most likely to be active in the stock market.
But active trading on the stock market is not the best strategy, says one analyst.
“It has been proven time and time again: passive investing beats the vast majority of investors, including professionals”Bankrate analyst James Royal wrote in an article published on Saturday.
“Although you might be tempted to sell for various reasons e.g. because of market volatility, you have to remain a passive investor if you want to achieve the index’s long-term return,” he wrote.
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His advice was aimed at younger investors — nearly nine in 10 Gen Z investors surveyed said they would actively trade stocks in 2023 in response to high inflation and interest rates, according to a Bankrate survey published in May. 3,676 adult US citizens took part in the survey conducted in April.
This level of trading activity was higher than any other group. In comparison, just 35 percent of baby boomer investors said they actively traded during the same time period, while just two in three millennial investors said they did.
The same survey finds that Gen Z investors are not simply exiting the market. In fact, they are more likely to buy stocks than other age groups.
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More than half, or 53 percent, of Gen Z investors said they plan to invest in stock-related investments in 2023, compared to just 19 percent of Gen X investors and 9 percent of baby boomer investors.
A previous survey suggests that fear of missing out might play a role.
According to a survey released in May by the CFA Institute and the Financial Industry Regulatory Authority Investor Education Foundation, over 40 percent of Gen Z investors in the US, Canada and the UK cited fear as the top reason they decided to start investing.
Read the original article in English here.