Millennials (born 1981 to 1996) and members of Generation Z (born 1997 to 2012) have easier and cheaper access to the stock market and other investments than any previous generation thanks to the rise of commission-free trading and user-friendly mobile investing apps.
So what are they investing in, and what’s their investing style?
The Motley Fool surveyed 2,000 adult investors about the types of investments they own, what types of stocks they own, which sectors of the economy they're invested in, and what factors they consider when determining whether to buy a stock.
We found that Gen Z and millennials share some commonality with each other and other generations when it comes to how large they think a high-performing portfolio should be and what factors to consider -- and ignore -- when weighing an investment.
Gen Z and millennials, however, make trades much more frequently than Gen X and baby boomers. The two younger generations also diverge on how risky they consider crypto to be as an investment.
For a deeper dive into generational differences and similarities when it comes to investing preferences, styles, and habits, read on.
Key findings
Key findings
- Stock ownership and retirement accounts: 37% of Gen Z and 55% of millennial respondents own individual stocks, and 36% of Gen Z and 47% of millennial respondents report having a retirement account.
- Crypto ownership and risk: Millennial respondents are more likely to own cryptocurrency and view it as less of a risky investment than Gen Z. Forty-three percent of millennial respondents report owning crypto compared to 22% of Gen Z respondents. Gen Z respondents view crypto as the second-riskiest type of investment following options. Millennial respondents think, on average, crypto is as risky as investing in real estate or options.
- Key investing factors: Potential for long-term gains are the most important factor across all generations when considering an investment.
- Portfolio size: Most Gen Z (59%) and millennial (63%) respondents think a high-performing portfolio should include more than five different companies or funds -- slightly higher percentages than Gen X (55%) and baby boomers (50%).
Investment products by generation
Individual stocks and retirement investing accounts are the most common types of investments among Gen Z and millennials
The most common types of investments owned across all generations are retirement investing accounts and individual stocks.
Gen Z and millennial respondents were the only groups more likely to own stocks than a retirement account. For Gen Z, that’s likely because a significant portion of that generation are not at an age where they’re considering a retirement account, or they may not have an employer offering a 401(k) match or similar incentives to invest in a retirement account.
Millennial respondents are nearly twice as likely than Gen Z and Gen X to own crypto and almost five times as likely as baby boomers. That tracks with studies done by Investopedia and Charles Schwab showing cryptocurrency is more popular among millennials than any other generation.
While cryptocurrency has become a divisive investment, it’s still more popular among respondents than bonds, options, index funds, exchange-traded funds (ETFs), and real estate investment trusts (REITs).
Stock type preferences by generation
Gen Z and millennial investors emphasize value, growth, and large cap stocks
The most common types of stocks owned by Gen Z and millennials -- as well as older generations -- are growth stocks, value stocks, and large-cap stocks.
As in previous years, Gen Z and millennials respondents show slightly more interest in ESG stocks and REITs than older generations, but not by much, and those types of stocks don’t make up a large part of their portfolios. Other surveys show that younger investors are more likely to align investments with their values, even if it comes at the expense of returns.
Market sector preferences by generation
Tech and financials dominate Gen Z and millennial portfolios
Technology is the most popular sector of investment for Gen Z, millennials, and Gen X, but millennial respondents in particular have a keen interest in tech stocks, with 53% of respondents in that generation saying they own stocks in the tech sector compared to roughly 35% of each of the other generations.
More about stock market sectors
Baby boomer respondents are more likely to own stocks in the financial sector than any other industry. Financials are the second-most common sector of stock held by younger generations.
Energy, healthcare, real estate, and utilities are also somewhat popular across generations, although millennials are more inclined to invest in healthcare and real estate stocks than other generations.
The data suggests that millennials are more likely to have a more diversified portfolio -- at least in terms of owning stocks in multiple sectors -- than other generations. Diversification is a tried-and-true strategy for reducing risk, although it goes beyond sectors and includes owning stocks from multiple countries and market caps.
Portfolio size preference by generation
Most Gen Z and millennials think a high-performing portfolio should have more than five different companies or funds
Across generations, respondents believe that a high-performing investment portfolio should be composed of 10 or fewer different investments. Forty-two percent of respondents said a high-performing portfolio should be composed of one to five different investments and 28% said a strong portfolio should be made up of six to 10 investments.
Just 12% of respondents said that a high-performing portfolio should include more than 20 different investments. That percentage is roughly the same across generations.
The tilt toward smaller portfolios could be driven by the fact that a small number of home run stocks -- the so-called “magnificent seven” -- have both outperformed the S&P 500 and driven its rise of the past year: Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Meta (NASDAQ:META), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), and Tesla (NASDAQ:TSLA). Still, it’s important to seek out diversification from those heavy hitters, and there’s value to be found in other investments, some of which could be the next Amazon or Apple.
The Motley Fool recommends owning at least 25 different companies from a handful of different industries when building a diversified portfolio. Investing in index funds, such as an S&P 500 index fund, is a surefire way to diversify your holdings. Plus, the best index funds come with minimal fees.
Investment product risk by generation
Gen Z, millennials split on risk of investing in crypto
Respondents were asked to assign risk scores to different investment products, with some interesting results:
- Gen Z respondents view all investment products as moderately risky, with very little separating each product.
- Millennial respondents see stocks as the least risky investment and options as the riskiest type of investment. They consider crypto to be among the riskiest investment products, although they still view it as moderately risky.
- Gen X and baby boomer respondents make very little distinction between investment products when it comes to risk, with each being moderately risky except for real estate, which they consider to be slightly on the riskier side.
Respondents were asked to score each of the following in terms of risk: stocks, bonds, options, index funds, mutual funds, ETFs, real estate, and cryptocurrency.
Investing factors by generation
Across generations, potential for long-term gains is the top factor when considering an investment; social media and influencer reviews are least important
Conviction that an investment will generate long-term returns is the most important factor for all generations of respondents when considering how to grow their money.
Dividends and the potential for short-term gains are either the second- or third-most-important factor, depending on the generation the respondent is part of. For example, baby boomers and Gen X care more about dividends, while Gen Z prioritizes hopes of short-term gains.
Financials and technical factors, such as a stock’s P/E ratio, market cap, and earnings per share (EPS), are of middling importance across generations.
The least important factors for all generations are reviews from influencers and social media buzz around an investment. While Gen Z respondents did not place too much emphasis on social media buzz, they gave it the highest average importance score among all generations, roughly a point above millennials, Gen X, and baby boomers.
Trade frequency by generation
Gen Z and millennials trade much more frequently than Gen X, boomers
Roughly 70% of Gen Z and millennial respondents say they make a trade at least once a month, compared to 50% of Gen X and just 24% of baby boomers.
This suggests that Gen Z and millennials are buying stocks more frequently than older investors, selling more frequently, or a combination of the two.
Hopefully, they are adding to their portfolio more regularly than letting go of investments. The Motley Fool recommends holding investments for at least five years, through market volatility.
Sources
- Charles Schwab (2022). “2022 401(k) Participant Study - Gen Z/Millennial Focus.”
- Investopedia (2022). “Younger Generations More Bullish on Cryptocurrencies.”
Methodology
The Motley Fool surveyed 2,000 American adults via Pollfish on Jan. 4, 2024. Results were post-stratified to generate nationally representative data based on age and gender. Pollfish employs organic random device engagement sampling.
