More gen-Z Canadians regularly investing than other generations: TD survey.

Written by:

Serah Louis

FINANCIAL POST

November 14, 2024

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Burdened with growing financial pressures, including the cost-of-living, it comes as little surprise that less than half of Canadians feel they’re saving enough money to meet their financial goals.

But there is a wave of younger Canadians investing early in order to get ahead.

A large majority —  68 per cent — of generation Z respondents in a survey from Toronto-Dominion (TD) Bank, released Thursday, said they have regularly invested funds (at least once a year), the highest of any age demographic. In comparison, only 58 per cent of all respondents said the same, and about a third of Canadians have never invested at all.

Some younger Canadians, priced out of the housing market while entering their careers, are managing to build wealth through means other than real estate.

Many millennials saw their parents become homeowners and grew up with the expectation that this was a financial milestone within reach for their generation, as well, said Cindy Marques, a certified financial planner and director at Open Access Ltd., who often works with younger Canadians.

However, generation Z is coming of age at a time when the housing market is more difficult to penetrate than ever and they are taking the initiative when it comes to building on their financial literacy.

“I think, in general, this demographic is a lot savvier, certainly a lot tech savvier, and they have access to information,” Marques said. “I’m not really surprised, to be honest, that the gen-Zers have learned from the (struggles) of the millennial cohort and are being proactive about that.”

In fact, Statistics Canada recently reported that 15 per cent of those under 35 who rented their principal residence and had no employer pension plan had a net worth greater than $150,000 in 2023. That’s a significant rise from five per cent in 2019.

Younger Canadians are also starting to take charge of their finances at a time when robo-advisors and other investing platforms have become increasingly accessible to entry-level investors who aren’t working with a financial adviser.

However, it’s clear that higher prices are keeping Canadians of all ages on edge. TD reported the cost of living was preventing nearly two-thirds of respondents from achieving their financial goals.

The survey also found Canadians across age groups are relying more on their savings accounts, which offer cash liquidity, in order to cope with their financial responsibilities.

More than a third of respondents said they were contributing to a savings account only, instead of contributing to a tax-free savings account (TFSA), registered retirement savings plan (RRSP), or first home savings account (FHSA).

For generation Z, this was actually more pronounced, with more than half of respondents contributing only to a savings account instead of a registered plan.

While savings accounts can help folks out for short-term emergencies, the other investment vehicles allow for compounding growth in long-term wealth building and meeting goals like buying a house or saving for retirement.

Marques advised that younger Canadians who are interested in investing but are also concerned about meeting their more immediate expenses, consider a TFSA as their “go-to” account. Unlike an RRSP or an FHSA, a TFSA allows you to make withdrawals at any time without facing tax consequences (your contributions are not tax-deductible) but still lets you shelter tax on investment returns.

Pat Giles, vice-president, saving & investing journey at TD, added that focusing on short-term savings isn’t necessarily a bad thing.

“For younger Canadians who are just starting to save and invest, it’s OK that longer-term goals aren’t fully defined yet,” Giles wrote in an email. “When you’re starting to save and invest, it’s not so much the dollar amount that counts at the beginning – what matters more is getting into the habit of saving and sticking to it.”

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