How each generation should invest

Here’s how you can make your investment strategies work for you, whichever generation you belong to.

Each generation comes of age during different economic circumstances, and this can have a major impact on their financial habits. Financial professionals have identified some investing tips for each generation that can help make their portfolios more efficient. Here are the investment strategies most commonly used by Boomers, Gen X, Millennials, and Gen Z.

Baby Boomers

Baby Boomers have a much higher spending power than any other generation. How they continue to invest will profoundly impact the investment landscape, as well as the overall economy. Compared to other generations, Baby Boomers have the most assets to invest and are the most likely to identify with a rather aggressive overall risk tolerance for long-term investing.

Boomers are generally attracted to balanced portfolios and income-generating investments, like real estate investment trusts and stocks that pay dividends. With historically strong average returns for retirement, they’re prepared to ride out market ups and downs. They’re likely to keep gravitating toward impact investing only if research continues to prove it can bring market-rate returns.

Many boomers nearing retirement want to continue working—just with limited hours or less demanding roles. They are focused on building a solid nest egg for retirement. Moving retirement funds out of risky assets like stocks and into bonds or money market funds is recommended.

Boomers should avoid the temptation to bail out their children, and focus on fully funding their retirement first. They should ensure that their retirement savings are appropriately allocated and balanced. They should focus on rebalancing profits toward fixed-income instruments.

Gen X

Gen Xers are known as the ‘sandwich generation’, stuck between caring for aging parents and children. They’re prone to emotional buying and selling of stocks, and are more willing to bet on riskier assets. Gen Xers prove to be sceptical and self-reliant investors.

Gen X tends to have built up some wealth and have enough work experience to earn higher incomes, but also come under more financial pressures. The higher age of first home ownership and children are major expenses for many Gen Xers. Gen Xers are focused on growing their wealth. They need to find a balance between building up a nest egg and keeping funds for living costs.

The first step is to establish their net worth, which will include savings, personal investment accounts, retirement plan accounts and real estate. Gen Xers should also review their investments to make sure they are performing consistently with expectations. Identify existing and projected expenses. Use a basic retirement calculator to see if retirement spending needs are on track.          

Gen Xers should consider term life insurance. It’s the best option for this generation because they can still get high coverage amounts for a reasonable monthly premium. Layering life insurance at this stage is recommended to save money on premiums. Depending on their plans for the future, they can consider adding the costs for health care or retirement home costs to the retirement plan.


Millennials are suspicious of traditional investing and are gun-shy regarding taking financial risks. Three in 10 millennials say cash is their favourite long-term investment. For a majority of millennial investors, Exchange Traded Funds are their investment vehicle of choice. Millennials who participate in the stock market reportedly invest a smaller fraction of their liquid assets and adopt conservative portfolios. This may also explain the millennial growing interest in crypto trading.

Millennials also seem to have growing faith in robo advisors (digital platforms that provide automated algorithmic investment services). It’s not surprising that the generation who grew up with technology is leveraging all kinds of high-tech tools, from social media platforms to websites, and mobile apps to pick stocks. Impact investing also plays a key role in how they invest.

Millennials are more conservative investors than one might expect with their favourite investment being cash, not stocks, real estate, or bonds. Millennials are largely responsible for the rise in socially responsible investing, seeking out funds and companies with certain environmental, governance, or social goals. With simple investments like target-date mutual funds and exchange-traded funds, millennials tend to ‘Do-It-Yourself’ when it comes to directing their retirement funds.

Millennials can take advantage of their long investment horizon by looking into some aggressive stock funds. Their financial plan should include necessary insurance coverage to protect their future. They should invest a set amount every month regardless of whether the markets are up or down.

Gen Z

It can be easy for Gen Z to think only of the most recognisable investment options such as individual stocks, mutual funds, index funds, exchange-traded funds. Areas like real estate investing, commodities, cryptocurrency, or starting your own business may require more research. They should also consider high-yield savings accounts, money markets, and bonds.

Taking time and doing research will help them find the best brokerage accounts, the best robo advisors, the best online brokerages, or the best investment apps. Choosing which method will work best will largely depend on their personality, lifestyle, and how much money is being invested. Investing through Fidelity or Robinhood can be a great place for young people to start investing.

Gen Z is motivated to retire early—perhaps more so than any generation to come before it. To seize the chance for an early retirement, investment portfolio diversification is becoming increasingly vital. Gen Z values salary less than every other generation. While money and salary does matter to Gen Z, they also care deeply regarding work-life balance, flexible hours, perks and benefits.

Gen Z should prioritise investing at a young age to reap the benefits when they’re older. The earlier they put small amounts of money into investment vehicles, the more time it has to compound and start snowballing into huge amounts of money.

Regardless of which generation you belong to, having the right investment mix that matches your profile and life stage is key to giving you the best chance of success in meeting goals.