How Different Generations Invest and What They Can Teach You

If there's one trait that spans generations today, it might be missed opportunity.

A 2024 LinkedIn study found that one in five Gen Z workers hadn't had a single conversation with a baby boomer or Gen X colleague in the past year. It's a missed opportunity for insight, perspective and advice on making better investment decisions.

Research shows that intergenerational learning benefits people of all ages by breaking down stereotypes, improving emotional well-being and building stronger, more cohesive communities.

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And when it comes to investing, there's plenty to learn from one another. Some differences come down to age and life stage. But technology, culture and a flood of new investment options have widened the gap.

Yet, every generation of investors shares the same goal: building wealth. So, maybe it's time we not only start talking, but also start comparing notes.

Highlighting the differences between generations is interesting, but exploring what each group could learn from the other might prove far more valuable.

How each generation is investing

The classic rule of thumb is that younger investors take more risk, while older investors play it safer. Most asset allocation models are built around that idea, suggesting an outsized weighting to stocks when you're younger and bonds when you're older.

And to a large extent, the data support that dynamic. In a Betterment survey, 64% of Gen Z and 49% of millennials said they were willing to take on more risk. For Gen X and baby boomers, the numbers dropped to 30% and 10%, respectively.

But the differences go beyond risk tolerance in a retirement account. They reflect broader attitudes toward money and how it's made.

Younger investors are more likely to chase short-term returns through single stocks. Indeed, 60% of Gen Z and 55% of millennials hold individual stocks, compared to 47% of Gen X and 44% of baby boomers.

Patrick Huey, owner and principal adviser of Victory Independent Planning, says older generations often stick with investments they know, while younger investors are far more willing to experiment.

That includes investing in cryptocurrency. Even though 84% of Gen Z investors view it as risky, according to a YouGov report, nearly two-thirds plan to invest in it next year. More surprisingly, Gen Z investors are nearly four times more likely to own crypto than a retirement account.

As younger generations dive into alternative assets like crypto, many may be doing so without fully researching the risks. "Perhaps without doing their due diligence, or reaching out to a financial adviser," cautions Kate Feeney, CFP® and wealth adviser at Summit Place Financial Advisors.

Still, there may be a silver lining: younger investors are getting started earlier than previous generations.

According to the World Economic Forum, about 30% of Gen Z began investing during college or early adulthood, compared to just 6% of boomers. And a Nasdaq survey found that 70% of Gen Z has been active in the market for one to five years.

While younger investors may lean too far into risk, older generations could take a cue. Many retirees underestimate how long their money needs to last. The average lifespan in the U.S. has climbed to 78.4 years, and the number of Americans living to 100 is expected to quadruple in the next 30 years.

Stocks remain the primary engine of long-term growth, so pulling back too much from equities can pose its own kind of risk.

Where they get their information: CNBC vs TikTok

Investing behavior is shaped by more than age. Media consumption also plays a role. And here's where the generational divide is especially stark. One generation grew up with Mr. Walter Cronkite. The other grew up with Mr. Beast.

In an era of endless information, it's easy to get stuck in an echo chamber. "Older Americans sometimes watch CNBC all day, while younger Americans may scroll TikTok for financial advice, and neither is healthy," Feeney says.

A MarketWatch survey found that about one in 10 Americans now get financial advice from TikTok. For Gen Z, it's closer to one in four. Over half of Gen Z respondents say they trust social media for financial advice, with 16% saying they "completely" trust it.

Social media use for financial information drops off sharply with age. While 30% of millennials still lean on it, the number falls below 10% for Gen X, boomers and the Silent Generation.

That said, older investors may underestimate the value of newer information sources. Still, across generations, there's room to be more selective about which sources to engage.

Interestingly, the most common source of financial advice for all age groups isn't the internet; it's personal connections. Nearly half of Gen Z investors (48%) rely on family and friends for guidance, compared to 35% of baby boomers.

However, 72% of survey respondents ranked financial advisors as their most trusted resource, although only 27% said they work with one. That gap suggests there's still plenty of room for better guidance, no matter your generation.

Investing biases and blind spots by generation

Research suggests that generational biases also shape how we invest.

One paper found evidence that millennial investors are especially prone to investment-related biases that include fear of missing out (FOMO), overconfidence and herding.

In fact, 50% of Gen Z investors said they've made an investment driven by FOMO – most often crypto, individual stocks or meme stocks.

Younger investors are also more likely to express confidence in their investing skills, with 70% of Gen Z and 68% of Millennial investors reporting they feel confident managing investments. This compares to just 48% of baby boomers.

But confidence doesn't always mean competence. A 2024 study found that younger generations were more susceptible to the Dunning-Kruger effect, overestimating their knowledge on complex financial topics. Baby boomers, meanwhile, were more likely to fall back on status quo bias, sticking with old strategies even when conditions change. Gen Xers displayed a mix of both tendencies, often leaning toward confirmation bias.

Huey sees this play out regularly. "Older clients usually excel at discipline, steady saving, thoughtful goal-setting and resisting the noise during a downturn," he says. "But they sometimes get stuck in their comfort zone, missing emerging opportunities by clinging to familiar strategies even when circumstances change. Younger clients are incredibly agile and curious, willing to rethink traditional approaches and jump quickly into new asset classes. But they often underestimate the power of patience and the risks of over-concentration or hype."

The best outcomes, Huey says, come when generations learn from each other. Every investor, no matter their decade, could benefit from listening to someone who sees the world a little differently.

As Henry Ford once said: "Anyone who stops learning is old, whether at twenty or eighty. Anyone who keeps learning stays young."

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