The most popular investing strategies, by generation

Every generation has a different combination of investing strategies, and younger generations like to try a little bit of everything.

The following types of investing strategies are broken down into how each generation employs them.

Buy and hold: Buying and holding refers to the practice of investing in stocks or other assets for the long term, regardless of short-term market fluctuations.

Growth investing: Growth investing is the practice of investing in companies that are expected to grow at an above-average rate, even if their stock prices are higher.

Short-term trading: Short-term trading is the practice of buying and selling assets quickly, usually within days or weeks, to profit from short-term market movements.

Fractional shares investing: Purchasing a portion of a full share, allowing investors to invest in expensive stocks with smaller amounts of money.

Direct indexing: Direct indexing is the process of buying and owning individual stocks of an index directly, as opposed to through a mutual fund or exchange-traded fund. This allows for greater customization and tax efficiency.

Socially responsible investing: Socially responsible investing is the practice of investing in companies that adhere to specific ethical, environmental, or social standards.

Robo-advisor investing: Robo-advisor investing is the use of algorithms to manage and optimize an investor’s portfolio, usually at a reduced cost.

Thematic investing: Finally, the strategy of investing in companies linked to particular trends or themes, such as clean energy or technological innovation.

This data comes from a survey of 1,000 US adults conducted by Charles Schwab Modern Wealth, and it was last updated in March 2024.

All generations of Americans primarily use the buy and hold strategy, but Gen Xers use it the least (48%) and boomers the most (60%).

All things considered, compared to older generations, younger generations generally embrace a greater variety of investing strategies.

Particularly, shorter-term trading (52% for both Gen Z and Millennials) and fractional share investing (48% for both) are among the more popular newer investing techniques used by these groups.

More so than the previous two generations combined, the younger generations also employ technology-driven tactics such as investing in robo-advisors.

Online investing platforms such as Wealthsimple and Betterment, which employ algorithms to build and manage investment portfolios, are known as robo-advisors.

Social media is becoming a more important resource for younger generations when making financial decisions.

According to the Charles Schwab survey, 72% of Gen Z respondents considered financial advice from social media, compared to 57% of Millennials, 38% of Gen X, and only 19% of Boomers. Generation Z is also beginning to invest earlier.

According to Charles Schwab, Gen Z investors began investing at an average age of 19, while Millennials, Gen X, and Boomers began investing at 25, 32, and 35 years old, respectively.

Early investing gives investors more time to increase their wealth because, in the long run, compound interest can lead to significantly higher returns.