5 things Gen Z is doing differently with their money

Having grown up amidst economic volatility, rapid digital transformation and social consciousness, Gen Z is far more deliberate with their money. With smartphones, affordable data plans, and social media revolutions, this generation is hyperconnected and highly informed about the importance of starting early. They are entering the investment world with an average starting age of 19, driven not just by wealth creation but by goals like beating inflation, gaining financial independence, and building a future that aligns with their values.

Below are five things Gen Z is doing differently with their money.

Starting early, making investing a life skill

Gen Z isn’t waiting for a steady income to make investments.

Their financial literacy has begun early due to exposure to digital and social platforms, enabling them to learn the basics of investing. In fact, according to a YouGov report, 21% of Gen Z invest more than 10% of their monthly salary. The reason is simple: early investments lead to greater long-term wealth.

For example, an SIP of Rs 2,000 per month started at age 21, earning 12% annually, could grow to Rs 2 crore by age 60. Wait until 30 to start the same SIP, and the corpus drops to just Rs 70 lakh. That’s the power of starting early.

This awareness around inflation, compounding, and market volatility is driving young Indians to treat investing not as a future task, but as an essential life skill today.

Liquidity over liabilities

Instead of borrowing money through loans, credit cards and EMIs, Gen Z prefers to invest in emergency funds, SIPs, and digital gold, thus gaining financial freedom.

When it comes to digital lending, reports claim that in FY24, Gen Z took around Rs 4 lakh crore, while millennials borrowed Rs 25-28 lakh crore of the total Rs 62 lakh crore retail loans disbursed.

There is a shift from status and brand-driven purchases to sustainable saving habits as liquid cash brings a sense of control in uncertain times.

Diversifying the portfolios

Gen Z is also challenging traditional norms by actively seeking unconventional investment avenues. This generation uses wealth tech and fintech platforms to access fractional ownership of high-value assets like stocks, commercial real estate and digital gold, leading to accessibility for investors with modest budgets.

Gen Z portfolios are not just about returns but also about personalisation, experimentation and values. Their desire for flexibility, liquidity and exposure to global trends.

Gen Z prefers alternative investment avenues like REITs (Real Estate Investment Trusts), sovereign gold Bonds, ESG-focused mutual funds, or digital asset baskets and international index funds. According to the YouGov 2023 report, 32% of Gen Z currently invest in stocks, compared to 24% of millennials, showing a higher risk appetite. 26% of Gen Z invest in cryptocurrencies, vs 14% of millennials, highlighting openness to alternative assets.

Purpose-driven investments

84% of Gen Z prefer equity mutual funds, with a strong lean towards mid-cap funds (45%), multi-cap funds (42%) and small-cap funds (41%), according to the YouGov report.  66% of Gen Z engage in long-term investing (5–10 years) while 51% buy shares during dips.

With social platforms highlighting environmental and social issues, Gen Z is driven more towards conscious consumerism. They prefer sustainability-focused projects, from renewable energy startups to eco-friendly brands. 44% invest opportunistically based on market news and events. They’re asking questions before investing: What does this brand stand for? What impact does it create?

Con: No credible expert-backed guidance to navigate social media

Gen Z frequently encounters financial advice through social media and peer conversations, often following unverified tips. However, these have led to financial losses, particularly in high-risk areas like F&O trading.

The Securities and Exchange Board of India (SEBI) has also issued warnings against unregistered advisors, urging investors to exercise caution and verify credentials before making investment decisions.  As per the recent survey by the CFA Institute, 59% of Indian finfluencers have had one or more brand sponsorships, yet 63% of them failed to disclose their financial affiliations. Alarmingly, 98% of them operate without regulatory approval, with only 2% being officially registered.

This situation underscores the vital need for assisted wealth platforms that offer expert guidance and credible, research-backed advice, helping investors across age groups to build wealth responsibly and avoid costly errors.

These assisted wealth management platforms help bridge the gap between curiosity and discipline, offering personalised, research-backed guidance that empowers investors to invest confidently without falling prey to risky ‘quick-win’ schemes.

Wealth building is not about instant gratification. It’s a journey requiring patience, strategy, and trusted advisors who guide investors step-by-step toward their goals.

(Ishkaran Chhabra is the Founding Partner & Chief Investment Counsellor at Centricity Wealthtech.)