Crypto is Gen Z’s most common investment. That may be risky, experts said

by | Jun 7, 2023 | Financial

Fatcamera | E+ | Getty ImagesCryptocurrency is the most prevalent investment held by Gen Z investors, a trend likely fueled by the cohort growing up during an age marked by technological change, social media and easier access to investing, according to a new joint report from the CFA Institute and Financial Industry Regulatory Authority’s Investor Education Foundation.But while young people can afford to take more investment risk relative to older generations, using crypto as the linchpin of an investment portfolio is nonetheless a risky bet due to its volatility, experts said.The report comes as the Securities and Exchange Commission sued Coinbase, the largest U.S. crypto exchange, on Tuesday. The agency alleged the company was selling investment securities while not being registered to do so. The SEC also sued rival Binance on Monday.Crypto zeal a concern if investors don’t diversifyFifty-five percent of adult Gen Z investors currently invest in crypto, according to the joint Finra-CFA Institute report.Gen Z is a cohort born in the late 1990s and into the 21st century, meaning its oldest members are in their mid-20s. Individual stocks ranked second, held by 41% of these investors, followed by mutual funds (35%), nonfungible tokens (25%) and exchange-traded funds (23%), the report said.More from Personal Finance:Here’s how to buy Treasury bills as yields top 5%Use this 401(k) investing strategy to calm your market jitters3 changes student loan borrowers could see as payments restartBy comparison, mutual funds were the most common holding among Gen X investors, a cohort born between 1965 and 1980. Forty-seven percent held mutual funds, followed by individual stocks (43%) and crypto (39%).  Gen Z’s relatively high concentration in cryptocurrency — examples of which include bitcoin and ethereum — and individual stocks “may be cause for concern” if investors aren’t adequately considering and managing risk, said Gerri Walsh, president of the Finra Investor Education Foundation.”Whereas mutual funds and most ETFs typically offer a degree of diversification, the same is not true when purchasing cryptocurrency and individual stocks,” Walsh said.Crypto should be a small piece of the portfolioGen Z is the first generation to gr …

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