When Mamadou-Hady Sow turned 18 in May 2020, his first order of business was to open a brokerage account and invest in Bitcoin.
Mr. Sow was inspired to get into the markets as soon as he was able after watching YouTube investment videos during the early months of the Covid-19 shutdown. The silver lining of spending most of his freshman year of college at his parents’ home in the Bronx was the $9,000 refund he received for room and board costs, some of which he put into cryptocurrency and stocks like Netflix in an effort to start building wealth.
It was an exciting time to get into investing, at least for Mr. Sow. And the fervor ratcheted up a few months later when a meme stock campaign on Reddit sent shares of GameStop soaring, catching institutional investors by surprise and capturing the world’s attention.
Mr. Sow used some of his rebate to get in on the run-up. While he was lucky to turn a profit, some investors — many of them young and new to the stock market — lost money when the stock fell sharply.
Five years later, Mr. Sow is far less interested in investing in meme stocks and more keen on maxing out his 401(k) and individual retirement account contributions every year. The vast majority of his portfolio is invested in index funds, while the rest is split between dividend exchange-traded funds and individual stocks.
He credits his change of heart to taking the time to learn more about long-term strategies and a boss from a summer internship who encouraged him to diversify.
“There was money to be made in what I knew then to be short-term, risky bets,” said Mr. Sow, who is now 23. “But, you know, I was younger.”
His experience mirrors that of many Generation Z investors who watched meme stocks soar during the pandemic and, inspired by investing content on social media, tried to cash in on the craze. Now, with a few more years of investing experience, their strategies favor more traditional assets like index funds and E.T.F.s, with an eye on long-term investing for retirement.
On the whole, Gen Z is saving for retirement earlier than past generations, research from Vanguard has found. Young women, in particular, are making gains relative to their elders. And while observers worried that the meme stock craze would lead a generation of investors to double down on risky, short-term bets, more than 60 percent of investors with less than five years of experience say they are more patient investors now than when they began, according to Charles Schwab’s 2025 Modern Wealth survey.
While many of Schwab’s under-40 clients traded meme stocks a few years ago, the firm has recently “seen many of these clients take an interest — some for the first time — in their 401(k) or retirement accounts and make informed investing choices,” said Jonathan Craig, the firm’s managing director and head of retail investing.
It helps that these young adults have more information at their fingertips than their elders did, thanks to social media, financial news sites and apps, and financial product features like automatic enrollment that make the mechanics of investing far easier than it used to be.
“On the one hand, that was a challenging time because it trained some people to think that investing is easy and short term” and even speculative, Matt Benchener, managing director of Vanguard’s personal investor business, said of the meme stock craze. “But on the other hand, it also got people interested in the markets, and got them opening brokerage accounts and opening investment accounts.”
‘My First Real Exposure’
Danny Guerra, 27, faced five-figure student loan debt after graduating from college in 2020. Eager to pay it off while the loans were not accruing interest, he was intrigued by posts on Reddit and other social media sites by users claiming to make money from their meme stock trades. Laid off from his first job and collecting unemployment, he wondered if trading could be the key to knocking out his debt more quickly.
Well-timed investments in GameStop and another meme stock, AMC, helped him repay his entire balance over the next year and a half. Despite those lucky bets, Mr. Guerra no longer trades so aggressively, and wouldn’t advise young investors to do what he did.
“I knew that wasn’t something I was ever going to be able to replicate,” Mr. Guerra, who lives in Belleville, N.J., said. “Like a lot of people, that was my first real exposure to it, and in hindsight, it was definitely more gambling than investing.”
He now focuses on long-term investments for retirement, putting his money in Vanguard index funds and making smaller contributions to alternatives like crypto. He even encouraged his mother, a Panamanian immigrant, to open a retirement account once he realized how it can be a powerful tool to build wealth.
Gen Z-ers got caught up in the meme stock madness in part because of the cost-of-living crisis, said Austin Payne, 26, who added that he traded around 100 times during the “euphoric years” of 2020 and 2021. He made a small profit, he said, but has since changed his habits to focus on long-term strategies, like investing in index funds via his 401(k) plan.
Sky-high prices make buying a home seem unattainable for many young adults. More than half of Americans between the ages of 18 and 35 believe Social Security benefits may not be available to them, and 72 percent said they would need to rely completely on themselves for retirement, according to a recent report from Acorns, an app for microinvesting.
“Gen Z has kind of felt priced out of the market in a lot of ways,” Mr. Payne, who lives outside Atlanta, said. “A lot of that builds up financial angst in a way where we were just looking for a way to give a middle finger to the market.”
Investing in Stability
While social media influencers hawking buzzy investment options like crypto and meme stocks may initially attract some young people to investment platforms, eventually the newbie investors can be overwhelmed by the amount of available information, said Meg Wheeler, a certified public accountant and founder and chief executive of the Equitable Money Project. To cut through the noise, many migrate to more traditional financial institutions and professionals.
“A lot of times after they’ve done their research, they realize, ‘OK, these aren’t actually all they’re cracked up to be, and when I look at the more stable, traditional options, that actually feels like a better way to go,’” Ms. Wheeler said.
Generally speaking, this is especially true for her female clients, who are more likely than her male clients to be turned off by flashier, social-media-driven investing fads. Things like crypto often “feel less accessible for them,” Ms. Wheeler added.
That rings true for Ilana Goldberg, a 23-year-old Manhattan resident. As she watched the meme stock fervor unfold, she became wary of investing in the stock market at all — she thought it resembled gambling rather than a strategic wealth-building exercise.
“I had definitely never thought of investing as something that I would even consider doing,” Ms. Goldberg said.
But her outlook changed during college, when friends asked if she was investing yet. “On social media, I don’t know if it’s a generational thing, but there’s this idea of passive income,” she said. “It’s very highlighted.”
Curious, Ms. Goldberg downloaded the Alinea Invest app, after seeing an ad on social media. She put $10 into Nvidia on the advice of a friend and watched in cautious amazement as her investment grew.
Over the ensuing months, Ms. Goldberg realized that investing wasn’t as complicated as she had thought, and contributing small dollar amounts at first allowed her to get more comfortable with the market’s fluctuations. If stocks declined one day, she began to understand that they would eventually rebound, so she slowly increased her contributions.
Now in law school, Ms. Goldberg said watching her portfolio grow had given her financial confidence she never would have otherwise possessed.
“I never expected myself to feel financial independence, just because of the fact that I grew up in a more traditional environment,” she said. But investing “makes me feel so happy, and I just feel very independent.”
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