Canada leads the way for young investors

Canada’s Gen Z has shown greater willingness than its counterparts in other nations to jump into the world of investing, according to new research from CFA Institute and the Financial Industry Regulatory Authority (FINRA).

The joint report, released Wednesday, revealed that nearly three-quarters (74%) of Canadian Gen Zs — those aged 18 to 25 — say they own at least one investment, compared to 57% in China, 56% in the U.S., and just 49% in the U.K.

“These new entrants to the world of investing are reshaping investment practices, products, and platforms,” said Paul Andrews, managing director for research, advocacy, and standards at CFA Institute.

They are also starting younger than previous generations, the report found. Almost a quarter (24%) of Canadian Gen-Z investors began investing before they were 18, compared to 12% of Canadian millennials and 9% of Canadian Gen-X investors.

In terms of investments, Canadian Gen Zs invest a median of $9,000, much higher than their U.S. and U.K. counterparts, and are most likely to own investments in crypto (57%), mutual funds (45%), and individual stocks (41%).

In terms of motivation, curiosity is the main driver to start investing among Canadian Gen-Z investors. Being able to start investing with small amounts is also key, with over six in 10 Canadian Gen Zs identifying this as a top reason they started to invest.

Gen-Z investors as a whole are more likely to have planning-oriented financial goals than non-investing Gen Zs. Among other goals, they are building emergency funds (55%) and saving for retirement (51%). The report noted the top financial goal for both groups is to see the world and take advantage of vacation time (62%).

As a whole, Canadian Gen-Z investors are confident in their futures and in their ability to reach their financial goals (44%).

Both Gen-Z investors and non-investors say the biggest challenge is the rising cost of living.

Generationally, Gen-Z investors across all regions are more reliant on social media and family for financial information, while millennials and Gen-X investors are more likely to leverage financial companies and professionals. According to the report, social media (53%), Internet searches (47%), parents or family (47%), and friends (44%) are the top ways Canadian Gen-Z investors learn about investing.

“Our study has underlined the extent to which their investment habits differ significantly from their predecessor investor cohorts. A range of macroeconomic and social factors such as rising inflation, the growing popularity and accessibility of cryptocurrency and social media ‘finfluencers’ are having a profound impact on how, where and what they invest in,” said Andrews.

Maddie Johnson

Maddie is a freelance writer and editor who has been reporting for Advisor.ca since 2019.