Investing Strategies Each Generation Is Using To Build Wealth

Building wealth is a lifelong endeavor, but it can look different at different stages. From Baby Boomers nearing retirement to Gen Z just entering the workforce, each cohort faces unique financial challenges and opportunities that shape how they think about money.

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Investing is one of the most common ways people grow their money, but each generation tends to have its own style. Some stick with tried-and-true methods like real estate and retirement accounts, while others are diving into tech-driven tools and entrepreneurial ventures. Here’s a closer look at how the four generations currently in the workforce are approaching investing and what strategies they’re using to build wealth for the long haul.

Baby Boomers (Born 1946-1964)

Boomers have already done most of their wealth-building as they are in or near retirement. This generation was raised by savers (the Silent Generation) and has also benefited from a sharp rise in real estate values. Market volatility doesn’t shake their statistically high-risk tolerance either, as they have never run into a high-interest debt they couldn’t pay off.

Stay the Course

Warren Buffett was famous for saying, “The first rule of investing is, don’t lose money. The second rule of investing is, don’t forget rule number one.” Boomers, who will retire soon if they haven’t already, would be wise to heed this sage advice. Having accumulated wealth through savings, appreciation and inheritance, the main strategy for boomers is just to hang on to what they have.

Plan for Wealth Transfer

According to Nasdaq, the baby boomer generation has half of the total wealth in the country. Much of this is likely to be passed on to subsequent generations, but with people living longer and healthcare expenses rising, it’s important to plan for that transfer of wealth while you still can. Planning for long-term care expenses and creating an estate plan are important considerations for boomers.

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Gen X (Born 1965-1980)

Gen Xers not only lived through the Great Recession of 2008 through 2009, but they were likely just starting their careers or getting established during that same time. Given that this generation was aged 28 to about 43 then, it likely had a significant impact on their attitudes toward building wealth.

DIY Investing

This generation understood what Bernie Madoff and other schemers did, and as a result, they are less likely than any other generation to work with a financial advisor. Between mobile banking and online investing, Gen X is taking investing into its own hands to save money and have more control.

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Wealth Transfer

While not an investment strategy per se, Gen Xers will likely benefit from inheriting wealth from their boomer parents. Understanding their parents’ wishes and the likely impact of their particular situation regarding inheritance will help Gen Xers know what to expect.

Millennials (Born 1981-1996)

Millennials are not only some of the biggest spenders on non-investments, but they’re also behind in terms of wealth accumulation. This is due to several factors, including the Great Recession, which hit at the beginning of millennials’ careers and may have gotten them off to a slower start, and exorbitant student loan debt. However, with 20 to 35 years left until retirement, they can still catch up.

ETFs for the Win

Retirement savings are crucial for this cohort, and given their time horizon, a set-it-and-forget-it approach may be warranted. Investing in exchange-traded funds (ETFs) allows you to take advantage of market returns without the risk of picking individual stocks. Commissions also tend to be lower than for mutual funds, putting more of your money to work for you.

Know Your Retirement Plan

Saving for retirement has never been easier, but that doesn’t mean it’s simple. Millennials would do well to fully understand their workplace retirement plans or what their options are if they’re self-employed. Max out your contributions, if possible, but if you can’t, at least contribute enough to get the company match — that’s free money.

Also, don’t sleep on the health savings account (HSA). You save pre-tax dollars, and you can then withdraw tax-free money to use for medical expenses. Whatever you don’t use each year will roll over to the next.

Gen Z (Born 1997-2006)

The youngest members of Gen Z are just now getting into the workforce, whereas the oldest are in the early years of their careers. This cohort has the most options when it comes to building wealth, and time is on their side.

Entrepreneurship

Gen Z has a more positive view of their ability to obtain generational wealth than the population as a whole, and they view entrepreneurship as the path to get there. More Gen Zers than the general population believe that starting their own business is the way to become successful enough to support their family in future generations.

Technology

Gen Z is the first generation to have grown up with the internet, so it’s no surprise that their investing and wealth-building strategy revolves around technology. According to a 2024 YouGov survey, over half (52%) of Gen Z respondents agreed that “cryptocurrencies are the future on online financial transactions,” compared to just 13% of boomers.

Compound Interest

With the longest time horizon of any generation that’s working, Gen Z will benefit the most from the magic of compounding interest. By saving and investing regularly, they can see their wealth grow over time.

Final Take To GO: Invest Like Your Age

Building wealth takes dedication, perseverance, financial literacy and the wisdom to know when each is needed. While each generation may have strategies they prefer, the common denominator is action. Making active saving and investing a priority will build wealth now and for generations to come.

Caitlyn Moorhead contributed to the reporting of this article.

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