What Percent of 18-29 Year Olds Invest in the Stock Market?

The financial landscape for young adults is shaped by economic factors, technology, and societal norms. Understanding how individuals aged 18 to 29 engage with the stock market offers insights into their financial behaviors and preparedness for future economic stability. Examining their engagement provides a clearer picture of current wealth-building trends.

Investment Participation Among Young Adults

Around 56% of U.S. Gen Z (ages 18-25) report owning investments. Among those invested, 55% primarily hold cryptocurrency, 41% own individual stocks, and 35% invest in mutual funds.

Investment vehicles like 401(k) plans and Individual Retirement Accounts (IRAs) are common entry points for young investors. A 401(k) allows pre-tax contributions, reducing taxable income while building retirement savings, often supplemented by employer matching contributions. IRAs offer tax advantages, with traditional IRAs potentially providing tax-deductible contributions and Roth IRAs offering tax-free growth and withdrawals in retirement. Exchange-Traded Funds (ETFs) and mutual funds are also popular for their diversification benefits and lower costs compared to individual stock picking. Some young adults also use micro-investing apps that allow investments of small amounts.

Participation varies within this age group. Gen Z women have a median investment of $3,000, while men have $5,000. Similarly, Gen Z individuals of color have a median investment of $2,000, compared to $5,000 for white investors. Income also plays a role, with 73% of Gen Z earning over $50,000 per year holding investments, compared to 45% of those earning less than $50,000.

Influences on Young Adult Investment Choices

Economic realities such as student loan debt significantly impact their ability to save and invest. Student loan debt is associated with reduced net worth and increased financial hardship, including difficulties paying bills and meeting healthcare needs. A substantial majority, 79%, of those with student debt report it affects their ability to save for retirement. This financial burden can lead to reduced contributions to retirement accounts, with some stopping contributions entirely or even withdrawing funds.

Financial literacy plays a role in investment decisions. While 75% of teens aged 13-17 express interest in investing, only 23% have actually started. Many young adults, 56%, haven’t invested because they lack knowledge on where to begin. Financial literacy, which encompasses understanding personal finance, budgeting, and investing, can empower individuals to make informed decisions and build wealth. Formal financial education is less common, with less than half of young adults having received it.

Technology and social media trends influence how young adults approach investing. Mobile trading applications and robo-advisors make investing more accessible and intuitive. Social media platforms are a primary source of financial information for 67% of Gen Z investors. However, social media also poses risks, including misinformation and the fear of missing out (FOMO) on speculative investments. Young investors often use multiple resources, including internet searches and family, to inform their financial decisions.

Comparing Investment Trends Across Demographics

Investment trends vary significantly across different age demographics, reflecting distinct economic environments and life stages. While 56% of U.S. Gen Z (ages 18-25) report owning investments, this contrasts with older generations. For instance, a 2017 study found that 31% of those aged 18 to 29 owned stocks, compared to 62% of those aged 30 to 64 and 54% of those aged 65 and older. More recent data indicates that 41% of households headed by an adult under 35 own some stock.

Compared to older generations, young adults are starting to invest earlier. The average age Gen Z begins investing is 19, which is notably earlier than millennials (25), Gen X (32), and baby boomers (35). This earlier entry is partly facilitated by accessible digital tools and platforms. While individual stocks are common across all generations, Gen Z and millennials are more likely to own cryptocurrency, while Gen X and baby boomers tend to favor mutual funds.

Historically, stock ownership among young adults has seen fluctuations. The percentage of 18- to 29-year-olds investing decreased by 11 percentage points after the 2008 financial crisis compared to pre-crisis levels. This suggests a lasting impact on younger Americans’ views of the stock market. Despite this, the current generation of young investors is more open to technology and AI-enabled financial advice, with 41% of Gen Z and millennials willing to allow an AI assistant to manage their investments, compared to 14% of baby boomers.