As online investing platforms become more readily accessible to the general public, young people are taking notice. And with the GameStop and Dogecoin investing frenzies showing just how much money consumers can make from investing, it's no wonder that investment interest among teenagers has accelerated.
In fact, a new Wells Fargo & Company survey found that 75% of teens said they’re ready to learn about investing — and 87% of their parents agree.
Teenagers learning personal finance from a variety of sources
An overwhelming number of both parents (92%) and teenagers (93%) believe that those who learn about investing at an early age will do better financially later on in life.
However, many said they don't have the acumen to back it up, as Wells Fargo found that 49% of teens and 32% of parents gave their investing knowledge a D or F grade.
As a result, parents have made their children's financial education their responsibility. About 6 in 10 parents (61%) said they're having money conversations with their children — although just 43% of teenagers agree.
Only 32% of parents have touched upon investing in these conversations, however. Plus, even fewer (29%) have used alternative methods to teach their children about investing, such as:
- Opening a custodial account and investing on their teen's behalf (17%)
- Encouraging their teen to play simulated stock market games, allowing them to gain knowledge about the market, though not actually investing money (13%)
- Gifting stocks to their teen so they can track their investments and learn about the market (7%)
Despite these efforts, only 20% of teenagers agreed that their parents have made the effort to engage with them using any educational investment activities. This may explain why teens feel compelled to get their knowledge elsewhere.
In addition to learning from their parents (57%), teens report gaining personal finance knowledge from other sources, including:
- School (47%)
- Social media (35%)
- Online websites and articles (34%)
And because of this eclectic education, as well as the accessibility of retail investing apps, a previous E*TRADE study found that 72% of younger investors are becoming more confident in their investment decisions.
Social media's impact on investment interest and education
Platforms that were originally designed to connect with others have now branched out into providing investment advice, allowing younger people to learn more about buying and selling stocks.
Only 12% of parent respondents claimed that their teens use social media to learn about personal finance, compared to the 35% of teens that actually do. But parents underestimate the sway these platforms hold — nearly half of teen respondents (45%) attributed their growing interest in investing to the social media-driven GameStop stock frenzy that took place in January.
"Social media has a profound influence on our younger generations," said Mariana Martinez, family dynamics consultant with Wells Fargo’s Wealth & Investment Management group. "Those generations grew up with social media and often trust many of the platforms more than their parents do."
But not all information is good information: Influencers on platforms like TikTok have created a surge of financial education content to capitalize on this new interest, but a report from cryptocurrency trade platform Paxful showed that 1 in 7 of these videos contained misleading information.
Perhaps this is why nearly all teenagers (95%) and their parents (98%) agree high schools should teach students more about personal finance, as they're more likely to draw from credible sources compared to the plethora of so-called "personal finance experts" found on social media.
Methodology: On behalf of Wells Fargo & Company, Versta Research conducted a national online survey between April 20 and May 3, 2021 of 318 teens ages 13 to 17 and 304 parents of teenagers ages 13 to 17.
Both survey samples were stratified by gender, household, race and ethnicity. They were then weighted to the US Census Bureau's current population estimates of persons in households with teens ages 13 to 17.