As the American dream becomes increasingly elusive, a growing number of young adults are turning to high-risk financial strategies, such as cryptocurrency and options trading, in hopes of securing their futures. The younger generations are the ones bearing the brunt. They feel like the traditional paths to prosperity — such as homeownership — are becoming increasingly out of reach.
Sports gambling, once a hazy gamble, has taken shape and onscreen, as evidenced by the changed mindset of 28-year-old Jacob Kaplan, who has bet on sports for years. He spends an estimated 30 hours a week studying for his bets on high-profile sporting events. For Kaplan, betting provides an adrenaline high that extends far past the sport itself. It is the only thing that provides an even realistic route to economic stability.
“I view this as more of a rational response on the part of the young investors who would like to achieve certain goals using their investments,” said Simon Oh, an assistant professor at Columbia Business School. Oh highlights how young people are having a harder time building wealth through conventional pathways.
“Relatively to the past, it’s become much more difficult to do that using traditional means of wealth accumulation,” he added. No wonder so many young people experience this. Indeed, nearly one-third of Generation Z have given up on homeownership since housing prices surged.
For others, such as 22-year-old Marcellous Donyae, taking these kinds of financial risks offer them the idea of control over their financial destinies. Donyae discovered options trading five years ago as a high school student. “I’ve always wanted to have a source of income that kind of gave me a sense of financial freedom and control over my life,” he explained.
Donyae participates actively in joint trading communities on Discord and other platforms. She’s put money into top shelf services, like Bookie Beats, to learn important angles on sports data. His approach highlights the innovative community-focused strategies young investors use to their advantage to pierce through the dark, complicated world of trading.
Over the past several months, the market has experienced big gains which have drawn increasing interest from these young/inexperienced investors. Share prices for retailers like Kohl’s have doubled in price over the past quarter. OpenDoor stock has soared, almost tripling this year. Increasing prices fuel investor demand in FOMO speculation. In the process, we’ve seen a significant increase in young adults trading in and out of leveraged exchange-traded funds (ETFs) that profit off of market fluctuations.
Kyla Scanlon, an economic commentator and author of In This Economy?, sheds light on the unique challenges young investors are facing in this climate. “Anything that you would think about on the traditional economic ladder is increasingly out of reach,” she stated. No wonder younger millennials and Gen Zs say they feel cut off from conventional economic pathways. This point of view is a direct result of the experiences they’ve had.
The popularity of leveraged ETFs has opened another door of opportunity to risk takers. Fund creators want to get on the bandwagon with this trend, bringing in new young investor money looking to make quick cash. These products pose substantial risks, and experts have raised concerns about their appropriateness for all investors.
Even with Jacob Kaplan’s devotion to sports betting, he knows that it won’t ever be the type of long-term money maker. He often earmarks much of his earnings for index funds or savings accounts, acknowledging the inherent risks involved in each bet he places. “There’s the risk that goes into each individual bet that you take,” Kaplan noted.
Financial nihilism among young adults is a sign of a deep change in how we feel about the pursuit of prosperity. As they deal with this tremendous economic dislocation, a great many of them are resorting to self-help by pursuing alternative investment strategies.