Gen Z investors are similar to Baby Boomers, but their portfolio choices are somewhat unexpected.

Author: Liam 'Akiba' Wright Source: CryptoSlate Translation: Shan Ouba, Jinse Finance

Just like fashion, the investment world also digs out things it once considered embarrassing from the depths of its closet and wears them again. The millennial-dominated crypto era gave birth to dog-themed tokens that could generate yield, as well as various financial gadgets named after food. Now, Gen Z enters the market wearing JNCO wide-leg jeans and carrying retro digital cameras; at least in one corner of the market, their interest in traditional investments is almost like their parents' generation.

The waistline of the jeans is lower again, and their tolerance for portfolio risk seems to be just as low.

A Binance Research report released on August 12 analyzed how users of different generations utilize the platform's direct equities, tokenized equities (bStocks), and traditional financial perpetual contracts. The youngest generation did not consistently leverage or frequently rebalance their portfolios. Across all three product categories, Generation Z exhibited the lowest turnover rate among working-age groups. However, these findings only cover a small portion of Binance users' usage; its direct equities product will not reach significant scale until June 2026. Believe it or not, the most traditional, conservative, and unimaginative investment portfolios in the crypto market may belong to Generation Z. A Rebellion of Focused Fees This difference is most readily apparent in ETFs. In early August, ETFs accounted for 25% of Gen Z's direct stock trading volume, up from 14.6% in June. Millennials accounted for only 9.5% during the same period. In other words, the younger generation's stock trading volume invested in funds is more than double that of millennials. The inflow of funds into these funds is more noteworthy than the trading volume. In June and July, non-leveraged ETFs accounted for 18.5% and 21.9% of Gen Z's net stock inflows, respectively; the share flowing into individual stocks decreased from 77% to 74.2%. Overall, Gen Z's investment in stocks decreased in July, with net investment down 17.4%; however, net inflows into non-leveraged ETFs only decreased by 2%, showing almost no change. Net inflows into individual stocks decreased by 20.4%, while leveraged products decreased by 28.5%. According to Binance data, Gen Z was also the only group whose ETF holdings continued to grow in July, with an increase of 2.9%; during the same period, ETF holdings by Millennials decreased by 4.5%, and by Gen X by 5.9%. Therefore, this is not simply a matter of young traders occasionally buying a little SPY between more stimulating trading sessions. ETFs remain a part of Gen Z's continued investment portfolio even as they scale back their investments. The stocks they buy certainly don't resemble the assets allocated by regional pension funds, but they're far from the "lottery-like betting" stereotyped by outsiders. Among Gen Z accounts that only buy and never sell, the highest average purchase amount per transaction was for the Charles Schwab U.S. Dividend Equity ETF (SCHD), at $16,567; followed by Broadcom at $12,370. Overall holdings are clearly biased towards semiconductors and AI. However, among popular stocks, some companies most closely associated with retail investor speculation actually had smaller average purchase amounts per transaction: Tesla at $633 and Nvidia on bStocks at $514. In other words, Generation Z still loves technology and AI, but their large sums of money aren't necessarily invested in the most popular and fervent stocks. Holding behavior also points to the same conclusion. The report shows that about 22% of Generation Z's direct stock accounts have never placed a sell order; Generation X's figure is 19%, and Baby Boomers' is 9%. However, Millennials lead this indicator at 30%, at least refuting some accusations of reckless financial management. If the scope is broadened from "never sold" to "buys more than sold," Generation Z ranks at the top. Approximately 76% of Gen Z bStocks accounts are net buyers, the highest percentage among all generations, 9 percentage points higher than Millennials. In direct equities, 77% of Gen Z accounts are buying; Gen X is at 74%, and Baby Boomers at 68%. They're not just trading less. On Binance's products that are closer to holding assets than short-term derivatives trading, they are mostly continuously adding to their positions. Perpetual contracts are used for trading, ETFs are used for holding. This behavior is even more surprising in the perpetual contract market. Theoretically, a generation that grew up with cryptocurrency should be quite accustomed to these types of products. They do use them, but not as aggressively as older users. Gen Z accounts average 13 traditional financial perpetual contract trades per month, compared to 17 for Millennials, 16.5 for Gen X, and 19 for Baby Boomers. Only 14% of Gen Z perpetual contract accounts are high-frequency trading accounts, lower than the 18% for Millennials and Gen X, and even lower than the 16% for Baby Boomers. This leads to a rather comical situation: a 22-year-old buying and selling stocks on a cryptocurrency exchange makes fewer perpetual contract trades than a Baby Boomer father. The use of leverage and inverse products shows a similar pattern. Among Gen Z's traditional financial perpetual contract accounts, 88.2% have never used leveraged or inverse products; this figure is 84.5% for Millennials and 85.9% for Gen X. On bStocks, 98.9% of Gen Z accounts avoid these products, a higher percentage than the other two working-age groups. However, Baby Boomers still lag behind: overall, they have the highest percentage of accounts avoiding leveraged and inverse products. Specifically, in direct equity products, this figure is 98.9%, compared to 96.5% for Gen Z. [Image: Gen Z has a lower usage rate of leveraged and inverse products. Source: Binance Research] So, Generation Z hasn't become the baby boomer generation. However, among those not yet of retirement age, their behavior is surprisingly similar. A more noteworthy difference is: what do Generation Z use to trade, and where does their money actually end up? In July, leveraged and inverse ETFs accounted for 9.25% of Generation Z's direct stock trading volume, but only 3.93% of net inflows. By early August, this proportion had further decreased to 2.65% of net inflows. This illustrates that their use of leverage aligns precisely with its intended purpose: short-term holdings, not long-term capital idling. Traditional financial perpetual contracts exhibit a similar pattern. Approximately 60% of Gen Z accounts are net buyers, the highest percentage across all age groups; however, the actual net inflow is less than 1% of total trading volume. Traders continuously open and close positions, ultimately leaving very little capital. Stocks are entirely different. Gen Z's direct stock trading net inflow as a percentage of total trading volume is 26.5%, with an average net inflow of $1,898 per account. This also explains why simply asking "Do young investors use perpetual contracts?" misses the point. They do use them, but the invested funds go elsewhere. Binance's previous research on the next generation of investors offers a possible explanation. Generation Z already accounts for approximately 44% of Binance Direct Stocks and bStocks users, and 45% of traditional financial perpetual contract users; they are the largest group in the first two product categories, while in traditional financial perpetual contracts they are roughly on par with millennials. Over 90% of users of traditional financial products across all generations come from emerging markets. In these markets, buying US securities through domestic traditional brokers can be much more difficult. For some of these users, crypto exchanges may actually be their most convenient brokerage channel. They are already familiar with the interface and have funds in their accounts; they can buy small shares and also enter the market outside of regular US trading hours. Binance reports that 13% of all direct equity users are Gen Z customers from emerging markets with less than $2,000 in equity assets. This makes their behavior easier to understand. Exchanges don't have to turn every young customer into a perpetual contract trader; they can also be a place for them to buy ordinary investment products. We used to put our money in "pickle jars." This contrast is interesting because some financial products that emerged in the early crypto cycle were simply absurd by traditional financial standards. Pickle Finance features "Jars" and "Farms": some mechanisms reinvest yields from other protocols and reward users who deposit the resulting tokens. These concepts can be explained using financial logic, but the names sound like someone who spent too much time browsing a supermarket and spontaneously designed a pension product. ShibaSwap refers to staking tokens as "Bury"; its interface also displays names like SHIB, LEASH, and BONE. The crypto industry has packaged what is already confusing for beginners into a user guide for ambitious little dogs. After a decade of products like this, one might naturally assume that young people who don't remember what the world was like before Dogecoin was would be more adaptable to the chaos of financial markets. However, Binance data shows that younger users are increasingly channeling their stock investment funds into unleveraged ETFs; their trading frequency is lower than that of Millennials and Gen X, and leveraged exposure accounts for only a small portion of their net investment. This doesn't mean they've abandoned cryptocurrencies. A 2023 survey by the FINRA Foundation and the CFA Institute found that 55% of Gen Z investors in the US held cryptocurrencies; CryptoSlate has also previously reported on the broader enthusiasm for crypto investment among young Americans. What's even more thought-provoking is that using cryptocurrency and pursuing the highest level of financial risk may never be the same preference. For someone who initially encountered finance through an exchange app, Binance isn't necessarily a rebellious alternative to a traditional brokerage account. It's simply a financial interface they're already familiar with; when stocks and ETFs also appear on this interface, there's no reason for their investment preferences to conform to the brand image cultivated by the crypto industry in its early years. This difference distinguishes Generation Z from both the millennials who follow them and the baby boomers at the other end of the age spectrum. They didn't build a traditional retirement portfolio. Semiconductor exposure, AI stocks, tokenized stocks, and 24/7 markets don't seem like a recreation of 1990s wealth management. But when they use these products, they follow a surprisingly old-school principle: buy some assets, hold more than you sell, and don't leverage every position. The crypto industry has spent years making finance more exotic to attract young people. The youngest users may have embraced the interface, but left some of the quirkiness behind. Fashion can bring back wide-leg jeans, and finance can bring back that simple desire: own something, hold it for a while, and hope it performs well. The pockets are big enough to hold both.