SEAN SANDERS: Gen Z put their money where their values are with a unique investment approach

Born between 1997 and 2012, Gen Z have lived their entire lives in a digital-first world. These are the people who have never known a time before social media, been without a smartphone, or lacked instant access to information thanks to a consistent global connection made possible through the power of technology.

These are also the people who are turning the world of investing on its head.

According to Bloomberg, the world’s youngest generation of adults now has $360bn in disposable income. Let that sink in for a second while keeping in mind that the oldest people from this generation are turning 27 in 2024. This incredible financial power is already reshaping cultural trends and redefining financial paradigms. Many of them are opting for investing rather than spending, making them one of the thriftiest generations yet — with an affinity for investment choices that may surprise.

Cryptocurrency

It was found in a recent study that cryptocurrency, such as bitcoin and ethereum, is the most common investment held by Gen Z investors. The appeal of cryptocurrency lies in its potential for high returns, accessibility and the promise of decentralisation. Cryptocurrency is also inherently aligned with Gen Z values such as transparency, inclusivity and digital-native tooling. Unlike fiat currencies, which are subject to government regulation and centralised control, cryptocurrencies also offer a level of autonomy that resonates with the Gen Z cohort.

These numbers not only reflect international markets. It was found in a 2022 study that 73% of SA Gen Zers made an investment in 2022, with 28% choosing investment alternatives such as cryptocurrencies. The importance of alternative currencies is only expected to grow, with 38% saying they were planning to invest in crypto in 2023/24, and 60% indicating they would like to be paid or get an allowance in crypto.

Art

Art has always been a form of expression, but for Gen Z it is also a viable investment avenue. It was found in a 2022 report that Gen Z art collectors spent more than 30% of their net worth on buying art, predominantly fuelled by platforms such as Instagram and TikTok. Young collectors are increasingly drawn to art as a means of cultural expression and a store of value. Unlike traditional investments, art offers tangible enjoyment alongside the potential for financial gain.

The rise of digital art and nonfungible tokens (NFTs) has also opened up new possibilities for ownership and investment. Digital-first Gen Zers are seeing enormous value in owning digital assets that are scarce and verifiably unique. This convergence of art and technology aligns perfectly with the sensibilities of a generation that values creativity and authenticity.

Real estate

Despite facing economic challenges such as rising property prices, Gen Z remains optimistic about real estate investment. While traditional homeownership could seem out of reach for many, alternative paths such as real estate crowdfunding platforms offer a way in. Additionally, the desire for community-orientated living spaces and sustainable developments resonates strongly with this generation’s values.

Stocks and equities

Gen Z’s appetite for alternative investments also extends to the world of traditional financial markets, where stocks and equities have been a long-time favourite for growing wealth. With commission-free trading platforms popping up everywhere and endless accessible investment education resources, young investors are jumping at the opportunity to participate in the stock market and build diversified portfolios aligned to their interests and values.

Driven by a desire for financial literacy and self-directed investing, Gen Z is leveraging technology and information to navigate the complexities of stock trading and investment management. From meme stocks and social media-driven investment trends to sustainable and impact-focused investing strategies, a new era of investors is reshaping the landscape of finance and challenging the status quo about risk and return.

Equity crowdfunding

Equity crowdfunding platforms have democratised access to early-stage investing, empowering Gen Z to support innovative start-ups and emerging businesses. Unlike traditional venture capital, which often caters to established investors, equity crowdfunding allows individuals to invest smaller amounts in exchange for equity or other forms of participation.

For Gen Z, this represents more than just a financial opportunity; it’s a chance to shape the future by backing companies that align with their values and beliefs. Whether it is supporting sustainable technologies, social enterprises or diversity-focused initiatives, equity crowdfunding enables Gen Z to put their money where their values are and actively participate in the innovation economy.

Sustainable products and ventures

Sustainability isn’t just a buzzword for Gen Z; it is a guiding principle that informs their purchasing decisions and investment strategies. As climate change and environmental degradation become increasingly urgent issues, young investors are seeking out opportunities that promote sustainability and social responsibility.

This has led to a surge in investments in sustainable companies, renewable energy projects and eco-friendly products. Gen Z understands that profitability and sustainability are not mutually exclusive, and are actively seeking out opportunities that offer financial returns and positive social or environmental impact.

Gen Z faces a far harsher economic environment than generations before them. It was revealed in a 2023 Gen Z and Millennial survey by Deloitte that the rising cost of living, coupled with high unemployment, rank among the top concerns for Gen Z respondents. But while the economic landscape may be rocky, the investment innovation one certainly isn’t.

• Sanders is founder and CEO of Altify.