Millennials and Gen Z in Kenya are challenging traditional wealth building methods which revolve around employment, land ownership, pension and saving schemes. However, millennials are steering towards technology-based and alternative investments such as cryptocurrency. We will determine whether these modern methods are beneficial in the long-term or are they too risky to consider.
Millennials and Gen Z, born between 1981 to 2012, are facing economic challenges such as high unemployment rate, rising cost of living, and increasing poverty levels. These have pushed them to explore other strategies that will enable them to enrich their lives and improve their standard of living. These strategies include buying crypto assets such as Bitcoin and Ethereum. Despite its high volatility, many Kenyan youth are opting for such avenues due to its perceived high returns which will enable them to enrich their lives. Second, millennials and Gen Z have embraced entrepreneurship and side hustles. Many youths, both employed and unemployed, have embraced the side hustle culture by setting up small scale businesses such as online shops to help them in supplementing their income. Kenyan youth are also forming financial groups (chamas) where they are able to pool their resources together and invest in various opportunities. The youth have also taken a keen interest in the stock market. Platforms such as FXPesa and Nairobi Stock Exchange have made investing in stocks and forex trading easier.
Investing strategies among Millennials and Gen Z is characterized by high risk tolerance unlike the older generation. This can be attributed to financial instability in their adulthood. For instance, 2020 was characterized by widespread job losses and closure of businesses due to the COVID-19 pandemic. Also, consistent increase in the cost of living have pushed the youth to take more risks in their investing strategies. Second, fear of missing out (FOMO) explains this. Over the recent years, there has been a rise in financial scams such as pyramid schemes because the youth are desperate to enrich their lives therefore they end up falling for these scams.
Despite these trending strategies showing a lot of potential, experts warn that focus on short-term gains and high-risk investments could eventually lead to financial instability. Insufficient financial literacy and regulatory frameworks for crypto assets and forex trading also pose a significant risk. By integrating their high-risk investments with low risk portfolios such as government bonds and savings schemes, they will be able to accumulate sustainable wealth.
Gen Z and Millennials are changing the narrative surrounding wealth by embracing new technology and alternative financial assets. Despite the high risk it poses, it reflects on the necessary adaptability against these harsh modern times. However, the question still remains, will their modern methods prove beneficial in the long term or are they too risky to consider?
