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There are at least two conflicting narratives about Gen Z and young millennials. One is that they are extremely risk averse — afraid even to go out of the house, much less on a date. Another is that they are extremely risk inclined — always betting on sports or speculating on exotic assets.
Both of these theories can be true. In fact, they may be equally rational responses to a concern that the world is changing and the old rules don’t apply. But they both require an understanding of risk that very few investors, much less young people, possess.
A recent survey from Northwestern Mutual shows that many young people are betting on unconventional high-risk assets because they believe it is the only way to build wealth. It also reveals some good news: Despite a year marked by wild market swings and deep economic uncertainty, more people feel financially secure than they did a year ago, including 39% of Gen Zers (up from 36%) and 52% of millennials (up from 43%). Just a few years ago meme stocks were all the rage, but now it is just straight up gambling, excuse me prediction markets. Some 32% of Gen Zers say they gamble in crypto or sports betting; 35% of millennials own crypto, while 24% bet on sports. Less than 20% of either invest in options or meme stocks. Even more surprising, many of those who don’t feel financially secure believe the only way to reach their goals is to take big risks.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
