The stereotypical trope of our generation is that us Gen Z-ers use apps for everything. The stock market is no exception, and the idea that it is just for retirees and Fortune 500 CEOs is a thing of the past. Instead, the rise in trading apps, just a download away, have opened the stock market to everyone – including Gen Z.
A tell-tale sign of the global situation is often indicated by how the stock market is doing. COVID-19’s effects were a prime example of this. And recently, the market has been doing well: it has rebounded and blasted past the rock-bottom lows of March and only grown since then. But what the news station might not tell you is that not only has the value of the market grown, but the number of people invested in it too.
Maggie Fitzergerald of CNBC writes that the major online stock market brokers — Charles Schwab, TD Ameritrade, Etrade and Robinhood — have had the number of new accounts skyrocket. In total, new accounts have grown 170% this year, and the majority of these new investors were young.
One of the most popular apps, especially with young millennials, is Robinhood; it’s had over 3 million new accounts created from January to March alone, according to Barron’s.
What has sparked this growth?
Tim Welsh, the founder and CEO of a wealth management consulting firm, explained in a CNBC article that this movement has been driven by new innovative technology that has made markets accessible to everyone.
With trading apps, the entire market is right on your phone. You can buy whatever and whenever you want. In addition, the money you make, you get to keep, because Robinhood (later followed by other apps) pioneered completely free trading. Instead of having to pay a broker’s commission, every cent you make is yours. Another latest feature is the idea of buying fractional shares. With these, you don’t need to have $1500 to buy one share of Google or the $2000 needed to buy Tesla; instead, you can buy fractions of stocks, investing as little or as much as you want.
Clearly, these new strides are working. A new study called Investing in a coronavirus world: A brave new dawn? found that three-quarters of Gen Z said they were planning to invest within the year. And most of these investors are new: people who currently own shares were more likely to invest in the next 12 months than those who had already invested.
Going back to apps, 19% of Gen Z cited the accessibility of easy-to-use trading platforms as a reason they would invest in the future. This doesn’t change as we grow up: for millennials, this number was 40 percent.
The Effects of COVID-19
More than one-quarter of Gen Z who said they were planning to invest explained that the market crash in March was the reason for starting. Indeed, the Covid-19 lockdowns and the plunge in markets in persuaded millions of new investors to open accounts. When the market plummeted, new investors came in to “buy the dip”, thinking that it would be the perfect time to get in.
And millennials and Gen Z turned over a new leaf for the stock market. With all these new accounts spending money, the market slowly creeped higher. At the head? Gen Z’s favorite companies. Big technology stocks are a force to be reckoned with heading out of the pandemic. And the numbers prove it: Amazon is up about 80 percent this year. Apple is up almost 60 percent, while Tesla has quadrupled its price since to the start of the year.
Social Media and the Market
As the generation who grew up with social media, we post everything online. And we haven’t stopped just because we started investing in the stock market.
Barron’s tells a fantastic tale about Ivan Jackson, a student in Virginia. Bored at home during the lockdown, Ivan made a Robinhood account and invested about $3,000. Currently, he’s made $775, a 26% return, with the majority of the gain coming from an electric truck company, Nikola. The interesting part is where he got his stock tips: Tiktok. “A buddy of mine sent me a Tiktok” isn’t the usual way to get news, but it makes sense coming from a Gen Z-er. And stock market tips don’t just come in the form of dances, but from threads on Reddit, Twitter and other social media platforms. We’re making corny jokes about stocks and sharing memes, even posting about our worst losses. Now, I’m not saying that I follow stock market Tiktokers… but if I did, I would highly recommend humphreytalks and benboozled.
The Long Term
Charlie Barton, one of the authors of the study, said he expected the trend of young people investing to only climb. He explained that “young people are turning to investing because the traditional places to put their money aren’t serving them well enough.” Life expectancy is only growing, which means Gen Z-ers have to make enough money to make it through retirement… or keep working for a long time. But interest rates in saving accounts are meager, and don’t provide the returns the stock market makes year after year. Gen Z also has a key thing on our side: time. Even if we lose some money right now, we can survive because we have the rest of our lives to save (and make) money.
I myself opened a Robinhood account in June, and invested a little over $900 into it. Like the rest of my new investor peers, the hoarding of my money did no good in a bank account, so into the market it went. After some trial and error, I’ve made about $150 so far. Every day, I estimate I probably spend an hour looking at the app. It has been a rewarding experience, and I find my money is better spent investing than shopping. I also highly recommend to every Gen Z-er that they join the stock market, even if you only have a limited amount of capital. Learning how the market works will never hurt you, especially at an age where we are allowed to be more experimental. Take the time, download an app, and have fun trading!
Now back to the jokes…
My friend recently asked me for a trading technique when I told her I have $100k worth of stock in the market. So I said, “Start with $200k”.
Cecilia Granda-Scott is 16 years old. She is Cuban-American, and was born and raised in Miami. Ceci is a junior at Ransom Everglades Upper School in Miami, Florida. She identifies as bisexual and came out in 8th grade. A swimmer since 5th grade, she is on the Varsity Swimming and Waterpolo teams. Her more recent passion is competing on the Speech and Debate team in Public Forum Debate, an activity in which she devotes hours too. Ceci loves researching topics that interest her for hours, and plans to be a lawyer in the future. She hopes to share relevant and important topics with the rest of Gen Z, and aims to inspire others to feel the same way. She is an avid reader and would definitely call herself a nerd!