Financial literacy is key to success for tech-savvy Gen Z

LOS ANGELES — Don’t let their ages fool you, Rachel Carter, 16, and Jada Raybun, 15, have already invested $100,000 in the stock market. Technically, it wasn’t real money; it was in simulated cash under the 100 Black Men of Los Angeles and Wells Fargo Junior Investment Program.

The program teaches high school students the fundamentals of the stock market by allowing them to create a mock investment portfolio to buy company stocks and then analyze its growth over the course of 10 weeks.

What do you want to know

  • More than half of Gen Z adults have already started investing their money
  • At least 50% of Gen Z investors regret the way they invested in the last year
  • Millennials and Gen Z tend to invest in what is most familiar to them, such as streaming services, tech devices and travel
  • Tickar is an application that allows users to scan products/logos and know about company/product related actions

“[Some of what we were looking for was] whether the business has shown growth or expected growth. If they were operating with free cash flow, then they were debt-free,” Carter said.

“We’ve always been taught risk rather than reward, so the riskier it is, the higher the reward. We knew we wanted to invest in risky ventures,” Raybun added.

They found their risk-taking method was worth it when it came to online retailers, like Amazon. However, regardless of the risk, there is also the risk of loss. Students lost 40% of their stock after Carnival Cruise failed to meet their forecast.

“I had the idea that cruises would open, people would book, and that would increase the market,” Carter said. “But it obviously didn’t do that.”

Investor, author and finance expert Jeremiah Brown said he also became curious about investing at age 16. He admits to making some of the same mistakes at Carter and Raybun’s age.

The only difference was his own real money at stake. He invested $10,000 in LinkedIn. “I thought all professionals used this platform, so I thought it was a good company to invest in,” Brown said.

Two weeks later, he lost all his money. Now 32, Brown said he hasn’t lost on an investment since.

“It taught me so many different lessons about consumer behavior, investor behavior, serenity,” he said. “You need to know exactly what you’re investing in, especially when it comes to investing in stocks because they’re so liquid and volatile.”

Studies show Millennials and Generation Z tend to invest in what is most familiar to them, such as streaming services, tech devices, and travel.

However, at least 50% of them regret the way they invested last year.

From an expert’s perspective, Brown thinks this is likely due to a lack of knowledge and rookie mistakes. “You want to focus on real, healthy, fundamental businesses and businesses,” he said.

Brown advises before investing in a stock, there are a few factors to consider:

  • Relative Strength Index (RSI): Whether a stock is overbought or oversold
  • Debt ratio (D/E): Divide the total debt balance by the total equity balance
  • Balance Sheets: Make sure the company’s net worth is positive and produces positive cash flow

Although technology has given Millennials and Generation Z an edge over previous generations when it comes to accessing and democratizing the stock market, financial literacy is proving to be the key to an investment and a successful trading.

That’s why Brown created an app, tickerto improve the novice investor’s financial knowledge by making it easier for them to learn about the more than 7,500 publicly traded US stocks.

Tickar allows users to scan any product or logo and then the app formulates the underlying actions, such as supply chain manufacturers, associated with the product or company.

“Tickar’s goal is not just to increase [the novice investor’s] investment prowess, but to enable them to identify products and companies they didn’t know existed,” he said.

Hopefully Tickar helps young investors like Carter and Raybun start thinking long term.

“[When I start investing my real money] I don’t know if I would be that risky,” Raybun said. “I would invest in companies that I know will experience long-term growth.”

Fortunately, it’s a lesson they’re now learning through financial literacy, instead of trial and error.

Sarah J. Greer