Gen Z Embraces Investments in 2021

From baking banana bread to tending to an indoor garden to taking up digital art classes, the past year indoors saw people venturing into new hobbies. For generation Z – those aged 24 and below as of 2021 – financial investment was one of them.

Research by UK bank Halifax found that spare time was the top reason that people from generation Z started investing, as reported by the Financial Times (FT) earlier this month. FT noted that online brokerages were experiencing “record levels of engagement from young, tech-savvy investors raised on YouTube tutorials and Reddit forums.” Raised as digital natives, the barriers to entry for this generation are relatively low given the variety of online resources and convenient platforms already available.

In Singapore, 85% of Gen Zs started to save before the age of 22, whereas only 41% of millennials did the same.  An analysis by Tiger Brokers found that Gen Z-ers were invested roughly 80% in traditional stocks and real estate, and 20% in stocks and options. Lamudi sees more visitors from the age group annually, with Gen Z-ers being one of the fastest-growing markets for properties such as foreclosures year-on-year.

Saving money, made fun

Personal finance is made more attractive to young investors by the gamification of e-wallets and apps, pop culture, and social media.  Platforms through which individuals may save and invest have become increasingly easier to navigate and attractive to users. With financial services becoming more virtually integrated, opening bank accounts, e-wallets and stock brokerage accounts can be done quickly and from the convenience of the home.

The Unionbank app’s Goals feature, for example, allows users to set up smaller piggy banks on the app for certain goals such as “house,” “rest and relaxation,” and “leisure, among others. The feature automatically debits a customizable amount from your account to the “goal,” and you may also adjust the frequency of saving.

GCash recently launched GInvest, which enables users to start investing in local instruments with as low as PHP50. Digital platforms such as Tonik have introduced more approachable branding catered to new investors with gamified user interfaces and use of a casual brand voice. To attract consumers from the younger age group, marketers and brokers are encouraged to meet them where they are – that is, online and through a convenient medium. Sellers are more approachable when they are easy to find, and easy to speak to.

#Trending: The Appeal of the Fintech Scene

Apart from customized savings goals and other easy-to-use features, social dynamics play a hand in influencing investment decisions too. CNBC described the appeal of investing in nontraditional assets such as cryptocurrency in an article published last January, citing the culture surrounding it. As seen in the recent Gamestop and Dogecoin frenzies, influence from celebrities and engagement in online communities on Reddit and Twitter feed into the popularity of all these new investment instruments. In the article, CNBC references Lana Swartz, author of “New Money: How Payment Became Social Media,” who says there is suddenly a new way to see finance and “to have an identity of yourself as an actor in the financial space.” 

Gen Z motivated to invest in financial future amid pandemic woes

The motivation to take charge of their personal finances stemmed not only from the extra time, but also from concerns over their career prospects and long-term financial future. A survey by Deloitte found that the aforementioned concerns were Gen Z-ers’ main sources of stress in 2020, followed by the welfare of their families and their education. The generation’s formative years were severely disrupted by the pandemic, with the majority of the age group having to adjust to the sudden shift to online classes and many entering the workforce amid a global economic crisis.

The Philippines hit its peak unemployment rate at 17.7% in April 2020, as well as its lowest labor force participation rate of all time at 55.6% in that same month according to the Philippine Statistics Authority. With companies enforcing freeze-hires, young people were forced to be more entrepreneurial – they focused on developing new skills, freelancing, and launching small businesses.

Changes in purchasing habits

In its most recent trend report titled The Outlook on The Residential Market: Pandemic Spurs Digital Adoption in Boomers in 1Q2021, Lamudi found that younger property seekers were becoming more open to different properties as an investment vehicle. In the first quarter of 2021, Gen Z-ers and Millennials led pageviews for apartments and foreclosures.

Foreclosure seekers showed significant interest in Calabarzon, particularly in places like San Pedro, Laguna. Given the ongoing infrastructure developments in the area, the trend indicates demand driven by seekers looking to capitalize on current prices in the region and anticipating potential gains upon project completion. The younger property seekers’ interest in real estate properties such as foreclosures signifies their eagerness to identify value-creating opportunities to support their long-term finances.

References: Business Times, CNBC, Deloitte, Financial Times, Fintech News Singapore, Philippine Statistics Authority

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