MW How to build the perfect investor: 50% Generation X and 50% Gen Z

By Weston Blasi

What today's younger investors can learn from their parents, and vice versa

Gen Z members may not be buying houses - but they're investing like no generation before them.

Generation Z get mocked at times for taking the dodgy investing advice they heard in a 30-second TikTok video, but a closer look shows they are more financially savvy than they get credit for.

A growing body of research finds that America's youngest investors are learning about money online, trading equities on their phones and exploring alternate assets in a way previous generations never did. And they're beginning their investing journeys much earlier: Charles Schwab reports that the average Gen Z member started investing at 19 - compared with age 25 for millennials, and as late as 32 on average for Generation X members.

So these younger investors are getting the head start many of their parents did not - but are they making better or worse financial decisions? We asked financial planners to look at how Gen Z is investing compared with millennials and Gen X members, and what the different generations can learn from each other about how to manage their money.

Gen Z

Let's start with Gen Z. This age group, defined by Pew Research as those born between 1997 and 2012, get a majority of their news and information online - and most of their investing knowledge, too.

"Research shows that Gen Z learns about investing from online sources, especially through short-form video, paired with family guidance and school-based financial education," Patrick Terrell, assistant vice president of investment services with Navy Federal Financial Group, told MarketWatch.

Gen Z investors also have a propensity for consumer-friendly stock- and crypto-trading platforms like Robinhood (HOOD), and making trades with just a few finger taps on their phones. And this digital-first mindset has not only made investing more accessible to them at a younger age; it could also be the reason Gen Z is more involved in alternative types of assets and investing, such as cryptocurrency, prediction markets and short-term trading.

But Gen Z investors also face specific challenges related to their youth, including inexperience, as well as financial pressures such as being more likely to be saddled with student debt, alongside the mounting cost of home ownership. "These young adults are confident and digitally fluent, but confidence doesn't always equal experience," Terrell added. Plus, "many face financial barriers like limited savings, living paycheck-to-paycheck or not knowing where to invest."

But some financial experts suggest that this financial strain could also be encouraging Gen Z to invest earlier in the first place. "There's some undertones of Gen Z thinking they are not able to afford houses, but they know they need to be buying assets, and this may be their 'house,' " Clifford Cornell, certified financial planner at Bone Fide Wealth, told MarketWatch. "They are not purchasing homes at age 25, but they are [still] asset owners."

Cornell works with a lot of young investors, many of whom are more interested in crypto and individual equities as opposed to the mutual funds and bonds that have long been favored by previous generations. An estimated 55% of Gen Z investors own some crypto, according to the CFA Institute, compared with just 39% of Gen X-ers.

Millennials and Gen X

So how do Gen Z investing trends compare with what their parents are doing?

Firstly, millennials and especially Gen X before them may have begun their journeys in personal finance without the modern internet-based trading tools that have made investing more broadly accessible, much earlier in life. What's more, millennials (born 1981-96) and Gen X (born 1965-80) had to navigate the 2000 dot-com bubble burst and the 2008 global financial crisis, as well as the fallout from the COVID-19 pandemic beginning in 2020. So they tend to invest for long-term stability, and not short-term thrills.

The current investment picture for Gen X looks the most divergent one among the demographic groups. Gen X members tend to play it safer: While they invest in individual stocks and ETFs at a similar rate to the other two generations, they have much stronger interest in mutual funds. Among Gen X investors, 47% currently hold mutual funds, per CFA, compared with 43% for millennials and just 35% for Gen Z. Gen X also invests in nonfungible tokens, or NFTs, at the lowest rate (15%) among the three generations.

On the flip side, CFA data show that a Gen Z investor is more likely to have a crypto investment than an investment in individual stocks, mutual funds or ETFs. That gets risky. Generally, crypto assets are seen as volatile and less safe over the long term than investing in an ETF SPY VOO IVV that tracks the S&P 500 SPX, for example.

So what can the generations learn from one another?

It turns out that the ideal investor borrows habits and traits from each of these generations.

"Gen Z, equipped with a thrifty and entrepreneurial mindset, excels in tech-driven platforms, but millennials and Gen X outperform on discipline, diversification, steady retirement contributions and risk management," Terrell said. "They've lived through more market cycles and understand the value of maintaining contributions even through volatility."

While Gen Z may have other advantages, too, like their ability to self-educate through online sources, one thing that makes its members stand apart is willingness to participate in financial markets, and how early many of them get engaged with them.

World Economic Forum data show that 30% of Gen Z began investing while in college or early adulthood, compared with 15% of millennials and 9% of Gen X while in the same age range. And, as noted earlier, data from Charles Schwab paint a similar picture. Those added years in the stock market can really make a difference when it comes to a lifetime of compound growth.

Research also shows that younger investors are more likely to purchase options, make margin trades, day trade or think they can beat the market, according to Vanguard. Those approaches to trading tend to be riskier than, say, buying and holding a mutual fund. It can, of course, be highly rewarding to take a less traditional or even riskier approach, but experts maintain that a perceived Gen Z propensity for short-term thinking could court trouble, as investing for a long-term time horizon is a key to sustained success.

"Gen Z could learn from older generations about foundational practices: the importance of budgeting before investing, strategically paying down debt to free up resources, starting retirement savings early, even with small contributions, and focusing on steady, long-term returns," Terrell said.

But investment-lesson learning isn't a one-way street. Older investors could take notes from the kids, as well.

"Gen Z has a harder time sticking to a plan ... but the kids are really keeping an open mind. It's harder and harder to do that when you get set in your ways," Cornell said. "As people accumulate assets and build wealth, they can become rigid in the way they think about markets. We see Gen X-ers who are scarred by '08, and they let it [affect] their investing decisions too much. Gen Z is good at synthesizing all this information and making moves accordingly, and not being closed off."

The bottom line: Gen Z might not be buying homes at 25 or often even in their 30s, but they are buying assets and participating in financial markets in ways older generations never did. "Maybe," said Cornell, "Gen Z's path to success is different."

-Weston Blasi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

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December 02, 2025 11:57 ET (16:57 GMT)

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