Generation Z's illusion of competence: Professor reveals a lack of financial knowledge and warns of the risks of overestimating oneself.

Generation Z's illusion of competence: Professor reveals a lack of financial knowledge and warns of the risks of overestimating oneself.

According to a report by www.br.de,

Generation Z is characterized by increased self-confidence and a higher level of ignorance when dealing with financial issues. A survey of 2,000 people who own or have owned stocks and/or funds shows that almost a third of 18 to 24 year olds do not know the difference in the volatility of stocks and funds. At the same time, 43 percent of those surveyed feel “well informed” about financial issues, even though actual knowledge is often low.

The ignorance and overestimation of Generation Z is also evident when it comes to the question of whether a portfolio should be regularly reallocated. More than half of 18 to 24 year olds agreed with this statement, although financial experts tend to recommend long-term and passive investments.

An analysis of the survey results shows that Generation Z has less knowledge of financial issues, but at the same time considers themselves to be well informed. This can lead to risky investment decisions, especially since Generation Z shows a higher risk appetite than older age groups.

One possible explanation for Generation Z's ignorance lies in the way they obtain information. While banking and financial advisors continue to play an important role, young investors are also increasingly relying on information from social media, family, friends and colleagues. However, these sources often provide unverified and incorrect information that can lead to risky investment decisions.

Generation Z's increased willingness to take risks and lack of financial knowledge could have long-term effects on the market and the financial industry. There is a risk that young investors will become frustrated shareholders due to incorrect information and a lack of knowledge. To avoid this, it is important to strengthen Generation Z's financial literacy and encourage them to adopt a sustainable and long-term investment strategy. This is the only way Generation Z can become the profit winners of tomorrow.