According to Charles Schwab‘s eighth annual Modern Wealth Survey, which examines how Americans see wealth, investing, saving, and spending, over 60% of Americans believe they are in a better place than previous generations to reach their financial goals.
Boomers are the most optimistic group, with 66% of them thinking they have the same or greater chance of succeeding in their goals as previous generations.
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Schwab Modern Wealth results
However, when surveyed to compare themselves to earlier generations, Gen Z (60%) and Millennials (62%) as well as Gen X (63%), all of the polled generations displayed an equivalent amount of confidence.
An increase in American stock market investors is probably one of the factors contributing to this optimism.
According to Schwab’s poll, 58% of Americans are now investing, which is consistent with recent data from the Federal Reserve showing that the same percentage of American households’ own stocks, whether they be individual shares, mutual funds, or retirement accounts.
The Federal Reserve statistics represents the highest percentage on record, up from 53% in 2019.
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By GlobalDataMoreover, the Schwab survey reveals that Americans are in better financial shape than those of previous generations because of more opportunities to build wealth, easier access to investments, and a wider range of investment options.
Gen Z is primarily responsible for this improvement in financial confidence because it has easier access to investing.
Nearly 70% of Americans are confident in their investment strategy, with financial advice and easy research being the top reasons.
Gen Z (71%) is most confident, with learning about investing at an early age being the biggest factor. Whilst lack of early education or schooling are the top reasons for lack of confidence.
Over half of all Americans asked say they are enjoying a more preferred lifestyle and are doing more effectively at investing than their parents did when they were their age (52%), when compared to their parents.
Moreover, American investors, particularly younger ones, are experimenting with a variety of investment methods, including buy and hold (56%), growth investing (53%), fractional share (37%), direct indexing (32%), socially responsible investing (31%), automated investing (28%), and theme investing.
“Investing is becoming a passion for an increasing number of Americans—they are more engaged than ever with their investments and are taking advantage of all the information and knowledge at their fingertips,” said Rob Williams, managing director of financial planning at Charles Schwab.
“The result of this engagement and access to investing education and resources is a more sophisticated, more knowledgeable, and most importantly, more financially confident population of American investors.”
However, Americans prefer professional financial advisors (59%), family or friends (57%), and social media (42%), based on Schwab’s survey.
76% don’t follow influencers for financial advice and are sceptical about social media’s effectiveness in managing money.
Despite increased access to investing, education, and advice, only 18% of Americans are currently on top of their finances. 32% feel they are on track to be more on top, while 34% need to make changes.
Only 36% have a written financial plan, with most lacking due to insufficient money, complexity, or time.
Jonathan Craig, head of investor services at Charles Schwab stated: “There has never been a better time to be an investor, and it’s a very positive sign to see that more Americans than ever before are engaged with their personal finances and taking steps to build long-term wealth, in particular younger generations who are getting started with saving and investing earlier in their lives. We of course saw the number of Americans investing go up during the pandemic, but there are a lot of factors driving this trend that were in place before that and continue to drive engagement today. Industry changes like lower costs and minimums to invest and get advice, broader access to sophisticated platforms and tools, a proliferation of investing information such as research and educational content, and significant product innovations have all made investing more accessible than ever before. Creating access for more people to become investors was Schwab’s core mission when our firm started more than 50 years ago, and it’s still at the heart of everything we do today.”
Logica Research conducted an online survey among 1,000 Americans aged 21-75, with 200 Generation Z participants, balancing demographic variables.
