{"id":8530,"date":"2024-11-25T13:59:36","date_gmt":"2024-11-25T13:59:36","guid":{"rendered":"https:\/\/finderica.com\/two-things-gen-z-and-millennial-etf-investors-should-watch-for-experts-say\/"},"modified":"2024-11-25T13:59:36","modified_gmt":"2024-11-25T13:59:36","slug":"two-things-gen-z-and-millennial-etf-investors-should-watch-for-experts-say","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=8530","title":{"rendered":"Two things Gen Z and millennial ETF investors should watch for, experts say"},"content":{"rendered":"
<\/span><\/p>\n
\n
\n
\n

Oscar Wong | Moment | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

\n

John Healy began investing in exchange-traded funds when he was about 18 years old.<\/p>\n

Back then, Healy said he worked as a security guard in a beach club earning\u00a0an hourly wage of “$12 a pop” <\/strong>and relied on message boards on the internet to figure out what to buy or sell.<\/p>\n

Today, Healy is a 25-year-old law clerk in New York City with a financial planner guiding his investments.<\/p>\n

What hasn’t changed? His interest in baskets of securities designed to closely track an index.<\/p>\n

“ETFs are still a vehicle for me to get action in the stock market,” Healy said.<\/p>\n

He’s not alone. Young investors are tapping into exchange-traded funds at high rates.<\/p>\n<\/div>\n

\n
\n
\n
\n

More from ETF Strategist:<\/h2>\n
\n

Here’s a look at other stories offering insight on ETFs for investors.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

\n

According to an annual report<\/a> by Nasdaq, millennials and Gen Zers are the two most likely generational groups to have ETF holdings in their retirement accounts, at 81% and 75%, respectively.\u00a0<\/p>\n

The survey polled 2,000 U.S. retail ETF investors in March. The report defines millennials as those born between 1981 and 1996, and Gen Z as those from 1997 to 2021.<\/p>\n

The trend has been growing for the past three years, or since Nasdaq has been conducting the report, said Alison Hennessy, head of exchange-traded product listings at Nasdaq.<\/p>\n

“The continued growth of retail investors investing in ETFs is certainly not going away,” she said.\u00a0<\/p>\n<\/div>\n

<\/a>Why ETFs have gained popularity<\/h2>\n
\n

ETFs listed in the U.S. hit a record-breaking<\/a> $900 billion in inflows and about <\/a>600 ETF launches this year, according to ETF.com.<\/p>\n

The investment vehicle has been growing in popularity among investors in general in part due to the lower associated costs, tax benefits and accessibility compared to mutual funds, experts say.<\/p>\n

“What really attracts investors to the ETF structure in general is, they’re easier to buy and sell directly on a brokerage account,” Hennessy said.\u00a0<\/p>\n

The same can’t be said for a mutual fund, experts say.\u00a0<\/p>\n

If you’re an active investor, you have the ability to make intra-day trades with an ETF, whereas a mutual fund won’t actually process your buy or sell order until after market close, explained Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.<\/p>\n<\/div>\n

\n
\n
\n
\n
<\/span><\/span><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
\n

Meanwhile, associated fees with ETFs tend to be much lower compared to mutual funds and other index funds.<\/p>\n

Index ETFs have a 0.44% average annual fee, half the 0.88% fee for index mutual funds, according to Morningstar. Similarly, active ETFs carry a 0.63% average fee, versus 1.02% for actively managed mutual funds, Morningstar data shows.<\/p>\n

And ETFs do not typically trigger capital gains taxes, Lucas said.<\/p>\n

“That’s what makes them so tax efficient,” he said. “For younger investors, you know really what you’re getting and there’s no surprises.”\u00a0<\/p>\n

When Healy began investing as a teenager, he was mostly driven to do so by his parents, who instilled in him the value of saving and investing his money, Healy said.<\/p>\n

“Now I’m living on my own, and I have my own personal finances to worry about,” he said.<\/p>\n

Gen Z investors who are starting out need to keep in mind two elements, according to experts.<\/p>\n

1. Research what your exposure could be<\/h3>\n

There are more than 3,800 U.S.- listed ETFs available in the market now, and a perk to consider is their transparency, said Hennessy.\u00a0<\/p>\n

“The vast majority of ETFs are disclosing their holdings,” or what’s held in their portfolio, she said.\u00a0<\/p>\n

To find out what sectors, companies, industries or risks you may be exposed to, look up the information on the ETF issuer’s website, Hennessy said.<\/p>\n<\/div>\n

\n

For example, say a fund’s name includes the term “international.” You may want to know what countries or classifications the fund focuses on.\u00a0<\/p>\n

“You have the ability to really drill down and look at the exact holdings in the fund,” Hennessy said.<\/p>\n

2. Take note of ‘wash sale rules’<\/h3>\n

Be mindful about so-called “wash sale rules,” Lucas said.\u00a0<\/p>\n

The IRS guidelines essentially blocks you from writing off a loss if you repurchase the same or an identical security within a 30-day window before or after the sale, he explained.\u00a0<\/p>\n

If you sell an ETF at a loss, and you buy it back or a similar one within that time period, you cannot get the benefit of the tax loss.\u00a0<\/p>\n

It can be easier to get around wash sale rules with an ETF compared to mutual funds, but you need to be careful how you handle it, experts say.<\/p>\n

“That loss that you would of taken just gets added to your cost basis to potentially take later,” Lucas said.<\/p>\n<\/div>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Oscar Wong | Moment | Getty Images John Healy began investing in exchange-traded funds when he was about 18 years old. Back then, Healy said he worked as a security guard in a beach club earning\u00a0an hourly wage of “$12 a pop” and relied on message boards on the internet to figure out what to<\/p>\n","protected":false},"author":1,"featured_media":8531,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[558,442,925,81,2992,1074],"class_list":{"0":"post-8530","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-etf","9":"tag-experts","10":"tag-gen","11":"tag-investors","12":"tag-millennial","13":"tag-watch"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/8530","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8530"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/8530\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/8531"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8530"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8530"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8530"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}