Boomers Began Investing at 35. Gen Z Started at 19. Think about that.

It's a Brave New World

Author

Josh Brown
October 02, 2024

Brave New World

Barron’s put this out in June and it probably didn’t get as much attention as it should have:

Younger Americans are beginning to invest sooner than previous generations, thanks to increased access to investing and financial education, according to the latest Charles Schwab Modern Wealth Survey.

On average, Gen Z—generally described as those born between 1997 and 2012—began saving and investing at 19 years old, according to the survey. Baby boomers—Americans born between 1946 and 1964—didn’t start until age 35, on average.

The survey, released Wednesday, sampled 1,000 Americans ages 21 to 75, plus an additional 200 Gen Z members, on their confidence in their investing.

In ten years’ time, the Boomers will be a significantly smaller percentage of the market and the Gen Z’s will join the Xers and Millennials as the bulk of it. Additionally, a higher percentage of Gen Z people will be long stocks. Certainly higher than the current portion:

Overall, 58% of those surveyed said they are investing currently, nearly three in five Americans. Gen Z had the smallest percentage of those investing today, at 45%. In comparison, 54% of millennials (those born between 1981 and 1996) and 58% of Generation X (1965 to 1980) said they are investing. Boomers were the leaders on that front, with 63% investing.

JP Morgan Chase introduced a brand new research report yesterday looking at the first real data set covering the pandemic and post-pandemic years for investors. They got the brokerage account records of 500,000 retail investors and have concluded that the new crop of Gen Z players are very different than their big brothers and sisters in the Millennial generation, not to mention their Xer and Boomer parents. It’s a groundbreaking look at what’s changed in the market and how younger investors have responded to the environment.

The share of U.S. households with at least some stock holdings reached a record high as of 2022, according to data from the Federal Reserve,  and the monthly percentage of individuals moving money from checking to brokerage accounts was three to four times higher during the pandemic than in the preceding years

Prior research on behavior of retail investors predates the recent growth in investing and does not provide a direct measure of the potentially changing connection between financial markets and household portfolios.

Our research aims to fill these gaps by examining investment portfolios in self-directed brokerage accounts. We use a new de-identified dataset of 500,000 investors spanning the years 2019 to 2023

Our results indicate that investors establishing new accounts in 2020 and 2021 took on more risk than those in adjacent periods, likely influenced by unique market conditions and heightened attention to stock trading during the pandemic. We also find that women’s portfolios held less investment risk than men’s, and younger investors held more market risk than older investors.

It should be pointed out that one thing hasn’t changed over the generations - women are still more cautious than men and less willing to endure outsized risk, whether its market risk (beta) or nonsystematic risk. This has always been the case and the Gen Z gender gap has persisted over time. See below:

There are a bunch of interesting charts and insights like this in the report, which I link to here. Or! You can just watch Michael Batnick and I break it down and discuss on an all new What Are Your Thoughts, full episode is below:

I would conclude that it’s a brave new world in the stock market these days and we really haven’t fully processed the ramifications of what’s happened in the last five years. I’m both excited and terrified, as usual.

Sam Stovall on The Compound

We had the legendary Sam Stovall (CFRA) on with us this week and he’s such a pro, just an absolute pleasure to learn from. The interview with Sam plus the audio from What Are Your Thoughts are both packaged into the new TCAF podcast, so if you’re a listener, you can listen here or watch it here:

Julia!

We’re old friends

My friend Julia LaRoche has really hit her stride as a podcaster and YouTube creator over the last couple of years, having interviewed everyone from Ray Dalio to Bill Ackman. She was in New York City the other day and we sat down to talk about my new book, You Weren’t Supposed To See That, now a best-seller on Amazon and a bona fide category killer. The feedback has been really nice, I am basking in it every day, so thank you for the reviews and the kind words.

You can check out my conversation with Julia here or wherever fine podcasts are played:

Thanks for checking in with me, have an awesome week, talk soon! - Josh