Gen Z priorities - sustainable development and investing?

In today's fast-paced investment world, a growing number of young investors are paying attention to the importance of sustainability. This is a priority especially for people born after 1981, i.e. for millennials and representatives of the Z generation. Environmental aspects play an important role not only during everyday shopping, but also in the context of choosing an employer or investing method.

The financial future is becoming a priority for younger generations, and Generation Z is ready to take significant steps towards investing. A study by Ipsos (Instant Research) in December 2022, with a group of 16 to 26 year olds, sheds light on new ways young people are approaching managing their finances.

Development of investments among Generation Z

As many as 41% of young people are already investing, and an additional 39% are willing to start their adventure with investing. This proves the changing approach to finance - young people are becoming more and more aware of the benefits of long-term investing in the future.

Gender differences and the pursuit of balance

The study reveals a significant gender difference when it comes to approaches to investing. As many as 56% of men declare active investing, while only 26% of young women take this initiative. This disparity presents a challenge that may require financial education to encourage more young women to actively manage their funds.

Motivations for investing

One of the main reasons young people choose to invest is protecting their money from inflation (66%). More than half of respondents (51%) indicated: the desire to secure a decent future. Interestingly, 39% of respondents admitted that they invest due to lack of trust to the state pension system.

Evolution in thinking about investments

In recent years, a change in the approach to investment has been noticeable. As younger generations enter the investment market, the importance of considering aspects also increases social, environmental and corporate governance (ESG). People born after 1981 show a clear interest in these issues, and this influences investment trends.

The power of influence of young investors

According to research conducted by Impactivate, as many as 89% of millennials expect their financial advisor to thoroughly analyze ESG factors before recommending a given investment. Modern investors realize that investing does not have to be at the expense of social and environmental values. This belief is driving the rise of ESG investing, which is seen as both profitable and positive change. Research shows that four out of five representatives of this age group consider ESG factors in their investment decisions.

Barriers and challenges

Despite the growing willingness to invest, there are certain barriers that young people must overcome. Not having enough money (57%) is the main obstacle mentioned by respondents. Moreover, 29% of them admit that doesn't know how to start investing, and this problem is more common among young women (42%). About 29% of respondents also admit that does not have enough knowledge about investing.

Education and information

Therefore, there is a visible need for financial education among the young generation. As many as 57% of respondents expressed regret that they had not been educated in the field of financial skills earlier, and 61% would like the topic of investing to be discussed in schools. It is interesting that social media, which dominates the lives of young people, is not the main source of information about investments. The exception is YouTube platform, which is popular among 18% of respondents (25% of young men).

How do they want to invest?

45% want to invest via a mobile application. 18% of young people would use the services of an advisor, and only 11% are interested in using a bank for their investments. Most of them want to invest in shares (including ETFs) – 59%, kryptowaluty attract only 18% (where, unlike the majority of the population, there are no gender differences).

Summation

Ipsos research shows that Generation Z is ambitious and ready to take action in the field of investing. Despite barriers such as lack of knowledge or limited resources, young people want to actively shape their financial future. The growing interest in investing, the need for financial education, and awareness of social and environmental issues are key aspects that will influence the way Generation Z will manage their finances in the future. These individuals are playing an increasingly important role in the global investment landscape. Their interest in ESG investing is a clear signal to the financial market that social, environmental and corporate governance issues are becoming key aspects in the investment decision making process.

Author of the article: Jan Hlavsa, CEO of Fondee