Millions of Gen Z Investors are Piling into Stocks, Here’s Why You Should Too

The influx of online trading platforms and their social media campaigns has made millions of young people flock to investing. With minimal commissions and nifty features, these platforms lower entry barriers for several young investors. They’re part of the reason why India saw a record high number of Demat accounts opening last year.

Although meme stocks and cryptocurrency get a lot of attention from millennials and Gen Z, stocks still remain the king. A 2021 survey showed that 73% of Gen Z investors own stocks which is more than millennials, who are at 66%. If you’re a young investor yourself and are not following this positive upward trend, here are some reasons why you should reconsider:

You have time on your side

As a millennial or Gen Z investor, one thing you have plenty of is time. With decades ahead of you, stocks are one of the best ways for you to take advantage of the compounding effect. You may have been warned that investing in the stock market carries a significant amount of risk. However, if you start early and have a diverse portfolio, you can withstand the losses and accumulate more wealth than with investment options.

Stock prices keep rising and falling with the fluctuating economy. Even so, investing in stocks regularly over a long time gives you greater opportunities to buy low and sell high. That’s why if you play the long game in the stock market, you can make the bear market work in your favor.

It’s how you can beat inflation

Putting away your savings into a low-interest savings account is only slightly better than stuffing it under the mattress. Inflation will eat away your hard-earned savings, even when it’s low. Imagine if you put your savings in a local bank account that offers 2% interest. You’re supposed to have 2% more money next year. Yet if the inflation rate is 2% or more, your money will still have less purchasing power.

In India, the Consumer Price Index (CPI) inflation rate is projected as 5.3% for the year 2021-22. If your savings account offers a lower interest rate, you’re at a disadvantage. Your money will keep losing purchasing power. If you want to prevent that, you have two options; opening a high-interest savings account and investing.

Compared to most brick-and-mortar traditional banks, digital banks offer high-interest savings accounts because of their low overhead costs. However, if you want to grow your wealth while beating inflation, you should opt for investment. In addition, stocks provide the highest potential returns in the long run than any other option.

You don’t have to hold the reins

The stock market has a learning curve, and even experts can make the wrong decisions and face loss. If you don’t want to spend time and effort researching stock market strategies, you don’t have to buy individual stocks. You can go for mutual funds instead.

Investing in individual stocks has its benefits. They’re highly liquid, have no ongoing fees, and give you complete control. However, investing in them is incredibly time-consuming and requires great expertise. Mutual funds, unlike individual stocks, bundle several company stocks into one fund. That’s how they make diversification easy, lower risk, and save you time.

Even so, mutual funds can still carry risks, and you should contact your mutual fund provider for details. Some digital banks also provide the option for investing in mutual funds. So if you have a savings account in your digital bank, you might be able to transfer an amount to mutual funds within the same digital banking app or online platform.

Investing in the stock market can be risky. However, if you start early, have a diverse portfolio, and play the long game, investing in stocks can help you get the best returns. If you’re young, take advantage of the time you have and consider investing in stocks.