Why some young people are investing based on vibes, not research

Sol Auster just started investing in the stock market this year and says he plans to do so until he retires.

The 20-year-old University of British Columbia student says he likes the idea of ​​passive income, where his investments make money without much effort on his part.

He says most of his friends invest too. They regularly monitor the stock market and trade.

“There are times when we're sitting around and someone tells you to buy something and you buy it. No research, just intuition,” he said. Cost of living.

Oster and his friends are part of a growing group that bucks traditional trading wisdom and relies on atmosphere and life experience to make investment decisions.

According to Ipsos poll of 1,001 Canadians conducted for In a CIBC Investor's Edge study, 34 percent of Gen Z respondents said they believe financial advice from older generations is irrelevant.

They said emerging markets, new financial instruments and changing priorities are reasons they do not rely on this advice.

The survey also found that 21 percent of millennials and 19 percent of Gen Z respondents were likely to adopt a risky attitude toward investing, which is higher than the general population.

Why People Invest Based on Vibration

Oster says the trades he made based on intuition produced better results than moves he made after research. His first big purchase was exchange-traded funds (ETFs) of Canadian mining companies, as he felt energy “was going to be the next big thing.”

“In the last seven months, my growth has been a little over 180 percent,” Oster said.

Instead of relying solely on research to make investment decisions, Oster and his friends use their courage.

He says one friend invested in Walmart because he went there for affordable prices as a student. Oster says he thinks other people concerned about their budget will also choose Walmart.

“It paid off, but it's not because of the research. It's just because that's what he sees and therefore what he's invested in,” Oster said.

Liz Henriques says most people, not just Gen Z, manage their money based on emotion rather than logic. She is a personal finance mentor based in Hamilton, Ontario, and the founder of Ambitious Adulting, an online platform that makes personal finance management easy.

She says technology has made investing more accessible, more popular and less elitist.

“Now the investment ecosystem is essentially the same as online shopping,” Henriques said.

She says the fear of falling behind financially is a huge motivator for young people who see investing as their only option.

“The idea was that you need to invest to move forward. You can't just save and buy a house anymore,” Enriquez said.

Investment risk management

Andrew Aziz says it's important that people don't invest based solely on emotions. Aziz is the founder of the Vancouver-based online trading community Bear Bull Traders.

His top investing tip for those just starting out: educate yourself and start early. He says accumulating wealth early can help young people pay for important events such as a wedding or house, and cover the costs of having children.

“These investments made 10 to 15 years ago are now coming to the rescue,” Aziz said. “With more responsibilities, it's harder to start saving money at 35 or 40.”

Aziz says newbie luck can inspire people, making them feel the return on investment. He also said losing $10,000 helped him understand the risks.

“Everyone can experience a couple of $1,000 losses or mistakes. But as you get older, your risk appetite should decrease because you don't have enough time or freedom to recover,” Aziz said.

Aziz says one of the challenges young investors face is not having enough information about the basics of investing, such as the company's history.

Influencers can influence people's investment decisions by telling social media users what investments are trending and revealing successful investment portfolios and strategies.

But Aziz says people need to remember that most influencers are paid to promote products and don't know the future.

“You have to be careful about how much of your wealth goes into spying on these people,” Aziz said.

Artificial intelligence is the latest investment hype, but Aziz urges people to diversify their portfolios because all bubbles are bursting. He also says users should be wary of scam companies.

When young people like Oster are just starting out, Aziz and Henriques advise them to put part of their salary toward investing to harness the power of compounding interest.

Enriquez says a common mistake she sees people make is holding onto money instead of investing it.

As he continues his investing journey, Oster hopes to contribute the maximum annual amount to his tax-free savings account and earn enough to live comfortably, even if it comes with some risks.

“Investing in general is a positive thing because you only learn when you lose,” he said.