Gen Z is Redefining ROI

By Priyanka Suri, Investor

Historically, older generations were taught to view spend with a highly practical lens; real estate and stocks represented traditional wealth-building vehicles, and to some, the most intuitive avenues to multiply net worth. But now, the investing landscape has evolved to encompass more options than ever, and Gen Z has grown up in an uncharted era in which “spending power” extends far beyond our ability to buy products, representing potential to make a difference with our discretionary dollars.

In Forerunner’s most recent consumer survey, 28% of Gen Z respondents expressed interest in owning a fractional share of a small business if they couldn’t afford to purchase something entirely—the top choice among those under 25—in contrast to older demographics expressing most interest in owning a share of real estate or an individual stock. These differing perspectives speak volumes about the way context and attitudes toward investing have changed over time.

28%: Percentage of Gen Z respondents who expressed interest in owning a fractional share of a small business, the top choice among other options, including stocks and real estate.?

Our survey suggests that older generations want to invest in securities while Gen Z’s investing behavior may be more driven by thematic values.?Perhaps that mentality is fueled by a counter-culture attitude at odds with industry giants, a desire to elevate the SMBs that were hit hardest by the pandemic, or a combination of factors unique to the?landscape?in which Gen Z has come of age.

Regardless of the cocktail of causes that led Gen Z to push for progress, there’s evidence that Gen Z allows values to guide the way they invest and spend in a multitude of ways—from supporting creators to embracing small businesses to investing in individuals. We saw support in our survey for the idea that, to Gen Z, every dollar invested or spent is a vote of confidence and an expression of identity… and that mentality is making waves.

We even see industry incumbents recrafting their strategies to cater to the values-driven mentality that Gen Z investors and consumers embody, proving that Gen-Zers have not only been transformed by the evolving world around them but have also played an undeniable role in pushing forward that evolution. There’s infinite evidence that illustrates this, but my personal favorite is the growing emphasis on?ESG standards. ESG criteria have been around since the early 2000s, and socially responsible investing existed long before that, but the concept has earned more airtime as consumers and investors have proven that this is something that really does move the needle.

Candidly, I believe that the younger generations’ active celebration of companies that uphold a sense of ethics—coupled with their relentless effort to police and penalize those who don’t—is a powerful force that drives forward the commitment to integrity for companies of any scale. Ultimately, aligning with investors’ values is an important key to success, and the impact of Gen Z’s early investing and buying behavior is only more evidence to prove that.

Reflecting on Gen Z responses to our consumer survey, owning a share of an SMB may not feel like the most lucrative investment to most—but it’s all about perspective. A return on investment isn’t always entirely defined by a dollar amount. To some, it’s evidence that your dollars are a celebration of values, a nod of support, or a vote of confidence contributing to broader change.

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