CFA Institute, a global organisation of investment professionals, and the FINRA Foundation, a not-for-profit organisation, published new research this week underlining the investment motivations among Gen Z investors aged between 18 and 25.

New research by the CFA Institute and FINRA shows that Gen Z are immersing themselves in the world of investing, with 63 per cent of those surveyed in China investing before they turned 21. However, this is behind the US which stood at 82 per cent, 81 per cent in the UK and 79 per cent in Canada. 

The survey covered over 2,800 Gen Z, Millennial and Gen X respondents from the US, Canada, the UK, and China, and examined the investment-related behaviour of those with and without investment accounts.

The report found that Gen Z individuals started investing due to a range of factors, including the ability to access financial information on social media and the proliferation of investing apps and cryptocurrencies.

Two in five Gen Z investors in the US (41 per cent), Canada (41 per cent) and the UK (43 per cent), and almost two in three (60 per cent) of Gen Z investors in China cited fear of missing out as a factor in their decision to start investing.

The report shows that Canada has the highest proportion of Gen Zs who invest, with nearly three in four saying that they own at least one investment, compared with 57 per cent in China, 56 per cent in the US, and 49 per cent in the UK.

According to the survey, crypto is a popular investment choice among Gen Z investors. More than two in five (44 per cent) of US Gen Z investors first started out investing with crypto, compared with 35 per cent of US Millennial investors and 23 per cent of US Gen X investors. Crypto was also the most common investment Gen Z investors started out with in Canada (35 per cent) and the UK (43 per cent), the research shows.

The majority of Gen Z investors are also focused on travelling, but UK investors want to buy a home, the firm continued. Sixty-one per cent of US, 55 per cent of Canadian, and 53 per cent of Chinese Gen Z investors say their top financial goal is having enough money to travel or go on vacation. Over half of Canadian Gen Z investors also cited being able to pay monthly bills as their top concern, while 48 per cent of UK Gen Z investors state that their financial goal is to buy a home.

Although investing is becoming adopted more widely, there are still a number of Gen Zs who don’t yet invest. The report found that a lack of savings is the top reason why Gen Zs in the US, Canada and China are not investing, whereas the top barrier for Gen Zs in the UK is not having enough income. Over half of Gen Z investors in the US, Canada and the UK also stated that a lack of knowledge of investing is a barrier to investing.

Paul Andrews, managing director for research, advocacy, and standards, CFA Institute said: “These new entrants to the world of investing are reshaping investment practices, products, and platforms. Our study has underlined the extent to which their investment habits differ significantly from their predecessor investor cohorts. A range of macroeconomic and social factors such as rising inflation, the growing popularity and accessibility of cryptocurrency, and social media ‘finfluencers’ are having a profound impact on how, where and what they invest in.”

“While social media and investment apps are making it easier for Gen Z to access financial information, there are still barriers preventing many Gen Zs from getting started with investing. This includes a lack of financial education, which continues to be a cause for concern. Governments, regulators, and investment professionals have a collective role to play in helping Gen Z acquire the necessary knowledge to make well-informed, responsible investment decisions,” he continued.

Gerri Walsh, president, FINRA Foundation, added: “The Gen Z population is diverse and digitally savvy. They are using mobile technology to enter the financial markets in unprecedented numbers and consulting a wide range of information sources as they do so. It is vital to understand their investing decisions and to provide them with the educational tools to prepare for those decisions.”

The total sample size in the survey was 2,872, comprising Gen Z (ages 18 to 25) investors and non-investors as well as Millennial and Gen X investors in the US, Canada, the UK, and China. Data was collected in November and December 2022. Millennials are defined as those born between 1981 and 1996 (ages 26 to 41 at the time of the survey), while Gen X are those born between 1965 and 1980 (ages 42 to 57 at the time of the survey).