Generation Z Investors Look to Old-School Sectors for Long-Term Gains

Two years ago, investors revelled in the excitement and non-stop growth of US tech, crypto, meme stocks, and other innovative sectors. However, 2022 has taught Gen Z and other investors harsh lessons about risking too much on short-term gains. Research by Saxo Bank indicates that young investors are pursuing a low-risk investment approach by prioritising long-term gains over quick, flashy returns. Consequently, an increasing number of Gen Z investors are turning to old-school sectors such as real estate and banking stocks, and even seemingly boring FTSE 100 stocks that may offer reliable dividends.

Saxo investor trainer Peter Siks believes that after applying this insight, Gen Z will thank themselves when they retire. Slow and steady accumulation of wealth is better than taking high-risk gambles with their assets. With the looming prospect of interest rates reaching their peak, more investors shift their attention to long-term reliable investments in preparation for market recovery.

The FTSE 100 stock market has been the most successful for several reasons, such as its lack of exposure to high-risk tech stocks and strong yields that offer reliable dividends. These same characteristics support defensive sectors such as energy, commodities, consumer staples and healthcare companies. In contrast, high-performing S&P 500 stocks, driven by tech giants, will have to contend with a more volatile market.

As central banks continue to slash stimulus programmes to combat rising inflation, investors will need to reevaluate their portfolios. The low-risk appeal of fixed income, such as government and corporate bonds, cannot be denied. As investors turn to safer investments to reduce risk, China is also starting to regain investor attention. The country’s growth rate is expected to soar in the coming years, providing huge opportunities for invested capital. Gen Z investors need to remember that investing is a long-term game, and the path to wealth building may lie in seemingly dull and boring investments that offer long-term returns.