Good news: Data suggest that young Canadians are more financially engaged than prior generations. For instance, according to data from the British Columbia Securities Commission (BCSC), over the past two decades the share of people aged 18-24 investing in securities has more than doubled.

The bad news, however, is that this rising interest among

generation Z

in investing isn’t expressed by disciplined long-term strategies such as purchasing low-risk mutual funds to build a healthy retirement portfolio, or other traditional financial advice, but increasingly by way of high-risk trading strategies to try and grow portfolios quickly and aggressively, according to the BCSC.

And this rise of financial engagement isn’t a result of an increase in disposable income. Gen Z doesn’t have any. They’re just surviving, according to several recent surveys. Many younger Canadians believe

retirement planning

will be more difficult than it was for their parents, according to a recent poll by the Bank of Montreal.

Instead, the increasing prevalence of high-risk investment strategies is a symptom of a worrying rise of “financial nihilism” among young adults.

Financial nihilism, a term attributed to podcaster Demetri Kofinas, is a philosophy that forgoes long-term financial security in favour of near-term consumption and high-risk investments such as meme stocks and cryptocurrencies.

This philosophy can be seen in spending patterns, as younger Canadians, more pessimistic about their economic prospects, increasingly favour splurging on small luxuries

such as travel

, as opposed to saving for a down payment or retirement. This so called “

doom spending

” helped fuel the 30 per cent rise in gen Z consumer debt

— m

ore than any other age bracket.

In the realm of investing, this means that younger generations are more likely to be involved in speculative crypto investments,

“vibes” based investment strategies

, and high-risk “YOLO” (you only live once) trades, putting a significant portion of their capital on a single, risky investment in the hope of a substantial return.

At the same time, young Canadians are now relying less on professional financial advisors, and increasingly managing their investments themselves, preferring social media and online sources for information and guidance.

And while financial experts might view these investment strategies as short-sighted and irresponsible, for many this behaviour could be viewed as absurdly rational.

As wage growth decouples from cost of living, youth unemployment rates skyrocket, and young people give up on ever owning a home, starting a family or retiring by following traditional financial advice, it should come as no surprise that younger Canadians are open to financially risky behaviour.

Housing costs remain far above historical averages. The mortgage payment on a representative home in Canada in the fourth quarter was more than 50 per cent of median household incomes — well above the long-term average of 40.5 per cent, according to National Bank of Canada.

In the choice between forever renting and economic precarity or a high-risk trade that could help with a down payment, treating investments like a roulette table doesn’t seem so ridiculous.

Unsurprisingly, these financial strategies are unlikely to pay off and as the high cost of living incentivizes younger generations to make risky financial decisions the consequences have been predictable.

Desperate for returns, young adults are now more likely than seniors to lose money to investment fraud, with social media and cryptocurrency at the heart of many of these scams.

And just as gambling addicts chase losses, young investors are more likely to trade more to win back what they have lost or find they cannot reduce or quit trading, compared with those older than 65, according to the BCSC study.

While young Canadians are already more concerned about their finances compared with the rest of the population, an alarming 79 per cent of gen Z investors expressed anxiety regarding their investments in a poll by the Canadian Imperial Bank of Commerce.

While many experts blame the ease of access to trading due to the rise of mobile trading platforms, the lack of regulation on crypto investments and predatory social media “finfluencers” as the main culprits encouraging this behaviour, it is increasingly clear that the underlying cause is more structural.

As traditional methods of wealth building remain out of reach for younger generations, we can’t blame ignorance or naivete for the rise of risky financial strategies.

If, increasingly, the only way to get ahead is by a “vibe-based YOLO trade,” or by putting all your money into an esoteric crypto coin, don’t be surprised when young Canadians do just that.

Danny Parys is a strategy and governance consultant based in Montreal.

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