2023 has been marked by economic turbulence, most notably significant inflation and surging interest rates. Against this backdrop, the young generation – Gen Z – has proven to be the most engaged demographic in the stock market.

However, market analysts caution that their investment approach might not be optimal. James Royal, a prominent analyst with Bankrate, underscores a recurrent trend. "Historically, a vast majority of investors, professionals included, lean towards passive investment. Given market unpredictability, a long-term perspective often yields better returns than quick stock turnovers," Royal observed.

This guidance seems especially pertinent for younger investors. A recent study by Bankrate, which gathered insights from 3,676 respondents, found that nearly 90% of Gen Z participants confessed to holding stocks only briefly during 2023. This decision was primarily driven by the prevailing economic conditions of inflation and heightened interest rates.

Interestingly, Gen Z's trading frequency outpaces that of other demographics. By comparison, a mere 35% of the baby boomer cohort was active in trading during the same timeframe. Meanwhile, two-thirds of millennial investors admitted to a similar short-term trading strategy as their Gen Z counterparts.

Furthermore, the study found a noteworthy detail: Gen Z doesn't shy away from the market after selling. They are more inclined to reinvest, making them more active in buying stocks than other age groups.

In terms of future investment plans, the younger generation remains bullish. Over 53% of Gen Z respondents expressed plans to dive deeper into the stock market in 2023. This enthusiasm starkly contrasts with older generations, as only 19% of Gen X and a mere 9% of baby boomers share the same sentiment.

A related study offers insight into what might be influencing Gen Z's investment behavior. The 'Fear of Missing Out', commonly known as FOMO, appears to be a motivating factor. This phenomenon isn't just restricted to the U.S. A significant 40% of Gen Z investors from the U.S., Canada, and the U.K. pinpointed FOMO as a pivotal factor in their investment decisions.