Gen Z Invests Earlier Than Any Generation … and Also Scores Lowest on Financial Literacy

Picture a 19-year-old opening their first brokerage account. That image used to belong to a tiny, privileged sliver of past generations. Today, it is ordinary. Gen Z began investing at an average age of 19, according to Charles Schwab’s 2024 Modern Wealth Survey, a full 16 years earlier than the baby boomers, who waited until 35. By most measures, they are the most market-fluent generation America has ever produced.

And yet, on an exam about the everyday mechanics of money, administered by the 2026 TIAA Institute-GFLEC Personal Finance Index, Gen Z correctly answered just 38% of questions—the lowest score of any generation measured. Early access to markets can predate financial literacy, paradoxically leaving young investors susceptible to poor investments. However, young investors can score a significant long-term advantage by taking a long view on investing and avoiding markets’ siren songs.

Despite Gen Z being the earliest-investing generation, market educators—or perhaps the right educators—haven’t connected with them, undermining the group’s long-term performance potential.

Trends in Young Investors

Stories about young investors typically focus on the same few trends: 1) they start early, 2) they love cryptocurrency, 3) they take advice from social media, 4) they are pouring money into Roth IRAs, and 5) they are increasingly placing bets in alternative, digital, or prediction markets.

Some facts are genuinely encouraging to see, such as Gen Z investors directing 95% of their IRA contributions in the third quarter of 2025 into Roth accounts, as Fidelity reported—versus 75% for millennials and 66% for Generation X. Paying tax now to grow money tax-free for decades is exactly the patient, compounding decision for investors in low tax brackets that the textbooks beg for.

But the same generation is being pulled the other way. Of Gen Z, 32% said they are participating in, or considering, prediction markets or sports betting, per Northwestern Mutual’s 2026 Planning & Progress Study, the highest share of any age group. When asked where they learn about investing, nearly half (48%) said social media, just ahead of internet searches and family. Yet, when asked whom they trust, Gen Z investors ranked parents and financial professionals first, and social media materially lower. They are learning from a source they don’t trust, which underlines the gap between access and investing education that faces young investors.

Blurred Lines Between Investing and Gambling Aren’t New

Here is the part many leave out: The line between investing and gambling is not new, and America has already decided where to draw it—once, with an ax, and once, with the Supreme Court.

On the evening of Dec. 15, 1887, the president of the Chicago Board of Trade spotted cables snaking out of his exchange’s basement and ordered them cut. They fed the era’s disruptive new technology: the stock ticker, which, for the first time, let ordinary people watch prices move in near real time. That access spawned “bucket shops”—storefront parlors where individuals didn’t buy a share but bet on which way its price would tick. By 1889, historians estimate, bucket-shop customers were wagering on the equivalent of a million shares a day—roughly 7 times the volume of the New York Stock Exchange itself.

Sound familiar? Like Polymarket and Kalshi today, bucket shops used the newest communications technology to narrow the distance in the public imagination between investing and gambling. Their reckoning came in 1905. In Board of Trade v. Christie Grain & Stock Co., Justice Oliver Wendell Holmes Jr. drew the line that still holds: Genuine futures contracts serve a real economic purpose: They stabilize prices and let producers hedge risk. Pure wagers on price movements do not.

That distinction is the ancestor of the modern Commodity Futures Trading Commission. The products that build wealth earned their legitimacy by being useful. The ones that merely thrilled did not.

The Cost of the Thrill

Fear of missing out is not new. What changes is the technology used to spread it.

With each innovation, ordinary investors have been pulled into markets by the same promise: This time, access is broader, faster, and more democratic. In the 1840s, it was railway shares bought with small deposits. In the 1920s, it was ticker tape, radio, and margin loans. More recent innovations include commission-free apps, online threads and servers, and viral screenshots of overnight gains. You’re no longer keeping up with the Joneses; you’re keeping up with the world on your phone.

When the hype train runs out of steam, it’s everyday investors left holding the bag, not the insiders, promoters, or early buyers. During the GameStop GME frenzy, the median investor who bought after Jan. 25, 2021, lost about 13%, while many lost far more.

That is the real cost of FOMO. It does not just encourage risk. It convinces people they are early when they may already be late.

For Gen Z, the danger is not that they are investing young. The danger is that they are investing in an environment built to turn attention into action before understanding has had time to catch up.

Young Investors Still Hold an Advantage

A bad trade at 22 is not the same as a bad trade at 65. Gen Z can lose money on zero-date options, leveraged exchange-traded funds, thematic funds, crypto tokens, or prediction markets and still have decades to recover, adjust, and learn. That does not make the losses harmless, but it does make them educational if they are treated as tuition instead of identity.

The worst outcome would be for young investors to become disillusioned with investing after being burned by speculative products. They are not the same thing. Markets have produced extraordinary tools for ordinary people to participate in the economic value creation produced by financial markets: low-cost diversified index funds, target-date funds, tax-sheltered retirement accounts, automatic contributions, and decades of academic research showing that patience, diversification, and compounding can do what hot trades usually cannot.

But those tools compete for attention with products built for activity. And activity is profitable. Trading platforms, market makers, fund issuers, exchanges, and prediction markets do not need traders to build wealth and make money. They need volume, spreads, fees, flows, and engagement. The more often one trades, the more someone else profits.

The choice facing Gen Z is which version of investing to practice. One is slow, boring, and statistically powerful in the long run. The other is fast, emotional, and beautifully monetized. Prioritizing long-term investing earlier allows young investors to compound their biggest advantage: time.

The Boring Truth

Gen Z did not fail a financial literacy exam in a classroom. They take the real one every time they open their phone and decide whether the next tap is an investment or a bet. Historical outcomes have proved the power of long-term investing. The challenge is to tune out the noise of schemes intended to make money. Do research, invest diligently, and create a plan on your terms. Your investment accounts will thank you.