Gen Z Takes More Investing Risks While Boomers Play It Safe: Which Strategy Wins?
Most Americans prefer to play it safe when it comes to investing. In fact, only 8% of Americans identify themselves as investment "first movers," according to a recent Northwestern Mutual report. However, there's a stark generational divide in how quickly people adopt new investment trends.
The survey found that 15% of Gen Z consider themselves first movers when it comes to investing, compared with less than 1% of boomers. Both approaches have advantages and drawbacks, but which generation's investing strategy is actually working better?
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Why Gen Z Takes More Investment Risks Than Boomers
The report found that Gen Z's appetite for risk extends beyond investing:
37% prefer calculated risks for higher returns
19% are "fast followers"
48% would switch careers or start a business for upside potential
Meanwhile, boomers tend to be more cautious:
34% actively avoid new investment trends
Only 15% became more comfortable with risk in the past year
"Gen Z came of age in an environment where information moves in real time," said Michael Robustelli, partner and private wealth advisor at Northwestern Mutual's Fortivus Wealth Group. "They grew up watching trends start and spread on social platforms in a matter of hours, so acting quickly on something new feels natural to them."
By contrast, many boomers built their investing habits over decades of market cycles, making them more skeptical of fast-moving investment trends and speculative opportunities.
Which Investing Strategy Is Performing Better?
As for which strategy actually works, the answer depends largely on where investors are in life.
Gen Z can generally afford to take more investing risks because they have time to recover from mistakes and benefit from decades of compounding growth. That gives younger investors more flexibility to explore emerging opportunities such as crypto, AI-related stocks and other developing investment trends.
"When you have 40 years of compounding interest ahead of you, a willingness to take on growth-oriented risk can be an asset rather than a liability," Robustelli said.
He also emphasized that the key word is "calculated" when it comes to investment risks. "The Gen Z investors who do this well aren't gambling," he said. "They’re treating risk as something to be managed rather than avoided."
For boomers, however, protecting accumulated wealth often becomes a greater priority than maximizing growth.
"Capital preservation matters more the closer you are to drawing down your savings," Robustelli said. "The 34% of boomers who actively avoid new investment trends are protecting accumulated wealth from speculation."
He also credits many boomers for staying focused on long-term goals instead of chasing every new opportunity.
"For most people I work with, victory isn’t getting to the end with the most money," he said. "They also want to live a full life and help the people they love do the same."
The Biggest Investing Mistakes Gen Z Makes
While Gen Z's willingness to embrace new opportunities can be a strength, it can also create challenges.
"The main trap is confusing activity with progress," Robustelli said. "Trading frequently and acting on every new trend feels productive, but it often isn't."
He also noted that Gen Z may be more vulnerable to FOMO-driven investing.
"Gen Z's investing decisions could be driven by what their peers are doing or what's blowing up on social media," Robustelli said. "The same platforms that surface legitimate opportunities also amplify hype and survivorship stories."
Another risk is neglecting the financial basics while pursuing higher-growth opportunities.
"When you're excited about emerging trends, things like an emergency fund, basic estate documents and life insurance feel like someone else's problem," Robustelli said. "They're not. A plan that strategically combines insurance with investments is designed to deliver better financial outcomes to people over the long term."
The Biggest Investing Mistakes Boomers Make
Boomers, on the other hand, may become too conservative.
"Some boomers pull back from risk too early and too completely, and that creates its own problem," Robustelli said. "Inflation quietly erodes overly conservative portfolios, and people are living longer than they expect to."
He also warned against dismissing every new investing idea simply because it's unfamiliar.
"Index funds were once a novel idea that skeptical institutions dismissed," Robustelli said. "Not every new trend is a bubble, and a blanket refusal to consider legitimate shifts in the market can mean missing real opportunities."
As he put it: "Skepticism is healthy. Rigidity is not."
Why a Balanced Investing Strategy Can Beat Either Extreme
Rather than choosing one generation's approach over the other, Robustelli said the most effective investing strategy combines growth potential with protection.
"It comes down to intentional risk-taking inside a comprehensive plan," he said.
That starts with a strong financial foundation, including portfolio diversification, an emergency fund and appropriate insurance coverage.
"That foundation is your floor," Robustelli said.
From there, investors can dedicate a defined portion of their portfolio to higher-risk, higher-reward opportunities while keeping their long-term goals intact.
Ultimately, Robustelli believes each generation has something to learn from the other.
"Gen Z's willingness to move and take calculated risk is an asset when it's grounded in a plan," he said. "Boomers' discipline and patience are an asset when they don't slide into overcaution. The people who do best are the ones who borrow from both playbooks."
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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