Beyond the Paycheck: Why Gen Zs Invest in Financial Markets

• In Event: Personal Finance and Inequality

Abstract

Recent surveys show that a majority of 18-25 year olds now own financial assets, with many opening accounts before age 20; however, theoretical models in both sociology and economics cannot account for this interest in investment among young people. This study examines why Americans are increasingly engaging in financial investment at young ages. Drawing on 60 in-depth interviews with college students and recent graduates aged 20-25, I argue that increasing levels of investment by young people reflect their deep concern about the ability of work and careers to deliver their desired lifestyles. I find that young people use investment to preempt perceived future lifestyle pressures, both material (low salaries, job instability, and volatile housing and service markets) and cognitive (work-related fatigue and identity loss). This research contributes to scholarship on how young people aspire to social mobility and manage labor market precarity by suggesting a key role for financial management in their strategies. Although engaged investing in diversified long-term holdings is thought to explain 30-40% of American wealth inequality, it remains unevenly accessible and appealing, suggesting that early investment behavior may aid in the mobility of some while reproducing inequalities for others.

Author

• Zosia Cooper, University of California-San Diego