Gen Z Investing Plays It Safe With ETFs, Ditches Sports Bets

Deon Radcliff Jr. spent the morning of his 18th birthday in August on something unusual for a teenager. The Tulane University freshman opened a brokerage account and a high-yield savings account before the day was over. He had about sixteen thousand dollars in scholarship money paid directly to him, on top of a full ride, and he put nine thousand of it to work in an S&P 500 index fund, shares of AI companies, gold and real-estate investment trusts. The birthday purchase fits a year in which gen z investing is starting earlier than ever.

His goal is to graduate debt free with a quarter million dollars in assets, which he described as entirely doable. Four years earlier, he had asked his parents whether they had investments or anything to pass down to him and his younger sister. The answer, he said, was no whenever he asked, which pushed him to learn about money on his own. His story is one small example of how gen z investing is taking shape this year: early, deliberate and strikingly conventional.

The data behind the cautious turn

Brokerage data on gen z investing points in the same direction. Among Charles Schwab clients classified as Gen Z, ages 14 to 29, roughly 65% planned to add money to their investment portfolios in late summer 2026, with ETFs the most popular choice, according to a recent sentiment report from the brokerage. Online trading platform Robinhood said its younger clients also favor ETFs, describing them as early building blocks for investors approaching their financial lives with healthy caution, MarketWatch reported.

The caution only goes so far. A Betterment survey published earlier this year found that more than half of Gen Z respondents had redirected money meant for traditional investing toward sports betting over the previous year, and roughly a quarter treated betting as part of their long-term strategy. Economists and market commentators have tied that behavior to economic pessimism and the pressure of rising living costs, a reminder that the riskier fringe of gen z investing lives in the same generation as the cautious core.

James Kostulias, Schwab's head of trading services, said the pattern marks a break from how young investors used to behave. Historically, he said, younger people carried a little more risk tolerance. What the brokerage is seeing now in gen z investing, he added, is a generation that reads as more cautious and more skeptical than the older cohorts around it.

Where the money actually goes

Researchers at Cerulli Associates analyzed Federal Reserve data to map the financial assets of people under 30, offering a snapshot of gen z investing portfolios. The largest share, 30.6%, sat in retirement accounts, though that trailed people in their 30s and 40s who had more years to contribute. Another 15.9% was held in mutual funds and ETFs, and 8% in individual stocks. Younger households also kept more in cash, with 10.2% in savings accounts and 7.5% in checking, both above the shares held by households in their 30s.

John McKenna, a senior analyst at Cerulli, said Gen Z trails other generations in retirement-account and individual-stock ownership, likely because the cohort is less affluent overall. At the same time, he said, ownership of individual stocks, crypto, mutual funds and ETFs has risen over the past few years. He added that the immediate concerns shaping gen z investing decisions are often more pressing: paying down student loans or credit-card debt, and saving for short-term goals like a vacation or a first home.

The AI bubble worry

The Schwab report also asked what keeps young portfolios up at night. Gen Z was the most bullish generation on energy stocks and the most bearish on real estate this quarter, and the top concern for the next three months was an AI bubble. Active traders across all generations ranked global macroeconomic issues, inflation and U.S. politics as bigger worries, a split that says something about which risks feel real to gen z investing.

Alexander Smith, a behavioral economics professor at Worcester Polytechnic Institute, said the gap between what young people want to save and what they can afford helps explain the riskier end of the spectrum. When people feel they are falling behind, he said, they reach for riskier plays, whether that means picking individual stocks instead of broad ETFs, concentrating in a hot sector like technology or AI, or gambling. He described legal sports betting as the modern version of lottery gambling, which has long drawn disproportionately from low-income players.

Learning it young

Some of the caution in gen z investing is being taught early. Chad Mallo, a financial-literacy teacher in Florida who spent two decades in banking, said his high-school students are eager to avoid the debt and financial missteps they watched growing up. They are investing earlier than prior generations, he said, and they are genuinely interested in building wealth because they have seen the mistakes their parents made and want no part of them.

John Taps offers one version of conservative gen z investing. The 26-year-old in-house tax accountant in New York City said watching his parents struggle through the 2008 financial crisis shaped his approach. He avoids sports betting and prediction markets entirely, invests mainly through a Roth IRA and a 401(k), and keeps the strategy deliberately basic. About 80% of his Roth IRA contributions go into S&P 500 index funds, with the remaining 20% in gold as a hedge against the dollar. He recently got engaged, and he framed the approach as making safe plays while times are good so he and his family are covered when they turn.

Makayla Wilson is another example of classroom-led gen z investing. The 22-year-old graduate student in Los Angeles was introduced to investing in a high-school financial-literacy class where her teacher, Christopher Jackson, helped students open Roth IRAs on their 18th birthday. Topics like budgeting and investing were not discussed at home, she said, and Jackson's openness about navigating finances as a Black man made the class land. Wilson, who was raised by a single mother, still contributes to her retirement account, watches it grow in index funds, and has used what she learned to help her mother set up auto-pay on recurring bills and raise her credit score enough to qualify for a car loan.

The U.S. Bank 2026 wealth report, which surveyed five thousand U.S. adults in June, found that Gen Z starts building wealth through investing at 19 on average, six years earlier than millennials and thirteen years earlier than boomers, Barron's reported. The same survey found that 62% of Gen Z respondents see the stock market as a more realistic path to wealth than buying a home, a belief driving much of gen z investing. Whether that early start turns into lasting security depends on whether the cautious habits of this summer hold through the next hype cycle.