Where Gen Zs are investing their money

Gen Zs mostly depend on social media and other digital tools for financial literacy. Shutterstock

Gen Zs are bucking the stereotype of footloose youth partying and recklessly spending to prove themselves a generation of astute investors boldly venturing into new territories. The 20-somethings have learned fast how to invest in shares and bonds at a younger age than their parents did.

While the older generation has traditionally favoured investments such as real estate, bonds, and stocks, GenZs are boldly charting the new waters of cryptocurrency, forex trading and non-fungible tokens (NFTs).

Others say they have taken up gambling as a form of investment.

Belinda Kiplimo, an independent financial adviser in Nairobi, says Gen Zs are keen on forex trading and cryptocurrencies.

“The investment patterns I’ve seen are an increased acceptance of money market funds (MMFs). In the past year, bond conversations have been on the rise in this demography and other channels include cryptos and forex trading,” she says.

Kendie Malowa, in her 20s, for instance, says if she got a genuine forex trader who is willing to teach her, she is willing to get into it as a form of investment. Forex trading in Kenya has been associated with scammers, making Gen Z weigh their options.

Financial experts say the younger generation, some of whom have recently hit the job market leaving employers rethinking organisational culture and work schedules, are looking to save and invest for the future in the age of rising inflation and high cost of living.

Some Gen Zs have taken up gambling as a form of investment.

Photo credit: Shutterstock

They came into the job market when the economy was sluggish and most are unemployed and self-employed, or in the gig economy, which is seasonal, hence the need to invest.

These Kenyans, aged between 18 and 27, are redefining their relationship with money, or rather, what is perceived to be their views on wealth, to engage in investing and retirement planning.

Jules Njeri, a 25-year-old freelance producer, who co-owns a photography studio with a friend, says when she gets money, she first spends it on bills and then does “a bit of investing here and there.”

She says she mainly saves in a fixed account and puts most of her investments in the photo studio business.

Being part of the risk-tolerant Gen Zs, she is keen on trying out different investing channels away from the common ones, such as homes and land. When I started working, I went to the bank and asked them for a way to save and I opened a fixed account. I put some savings in the bank, and the rest I invest in buying more equipment [for her photo studio],” she says.

Besides ploughing her money back into her studio by upgrading cameras, light rings and editing software, among other equipment that grows her business, she also invests in start-ups.

A young woman uses an automated teller machine to withdraw money.

Photo credit: Shutterstock

Bailout strategy

“Let’s say a friend has a business and it’s struggling, I will help them out by investing my money there, and when it gets back on its feet, they start paying me back or I buy shares in their business,” she says.

So far, she has invested in three of her friends’ businesses and has shares in them.

Jules’s bailout strategy is to invest a certain amount in struggling business A, and when it’s back to profitability, she gets her money back, or if the business is really good, she buys shares in it and is paid some ‘dividend’ after all expenses are deducted.

Kendie Malowa is another Gen Z whose interest in investing was recently piqued after her employment.

After graduating from the university, she started a sewing business with their cousin, but later on, she landed a formal job as a writer.

“I’m currently investing my money in a money market fund (MMF), a Sacco, and in bank savings,” says Ms Malowa.

“I don’t touch my MMF or sacco, I spend my savings from the bank or M-Pesa and Mshwari often.”

Sacco savings

Ms Malowa explains that she started investing just recently because she needed to get her affairs in order, such as renting a house and buying household items, among others.

Alice Wanjala, a 23-year-old, who works as a materials planner, overseeing inventory acquisition and supply management for companies, says she spends her money on household items such as furniture and kitchen appliances.

“Away from my pet peeve of buying clothes, I have sacco savings, money in MMF, and a fixed deposit account in the bank,” she says.

“I got into investing by partially teaching myself and by word-of-mouth from friends and social media.”

When asked why investing is important to her, she says: “I see investing as a form of delayed gratification. There’s so much to learn from investment, and it allows me to multiply what I already have.”

“Generally, I invest 40 percent, because 60 percent is enough to cover my bills and anything else I need in the house. I also get money from my hobby, which is braiding hair.”

Finfluencers appeal

This generation is also more open about talking about money than millennials, Gen X, and baby boomers.

TikTok has become one of the most popular sources for financial tips and advice, particularly among Gen Zs.

With various trends such as girl math, loud budgeting, and cash stuffing, financial advice is increasingly born on TikTok and spreading fast.

#Fintok is the hashtag young people are using to get financial tips and know what others are buying, selling, spending money on or investing in.

The community has garnered more than five billion views on the platform, highlighting a need for financial literacy about making money among this generation.

Being the first digital natives, Gen Z is also more comfortable investing via apps and buying things online than other generations.

This has given rise to “finfluencers” on TikTok, YouTube, and Instagram ready to show them the three easy steps to make hundreds or even thousands of shillings.

GenZ is also using the platform to learn business ideas and how to make money to attain their ‘soft life’.

Finfluencers appeal to Gen Z investors because they produce engaging content that is instantly accessible and, even better, free.

“They seem keen to find out expert opinion on investing more, especially after the Covid-19 pandemic, this is when I noticed the trend rise,” said Ms Kiplimo.

“Gen Z also tend to tell each other about their investment and about the advisers they meet more than the older generation who are more discreet about money and finances.”