When Jacob Kaplan reflects on his journey toward financial stability, he is acutely aware of the substantial risks involved. For years, the 25-year-old has immersed himself in the world of online sports betting, dedicating approximately 30 hours each week to this passion. Frequent exchanges with fellow betting enthusiasts on platforms like Discord, along with a subscription to the sports data service Bookie Beats, have become integral to his approach to wagering. “There’s the risk that goes into each individual bet that you take,” Kaplan stated. “But if you surround yourself with the right people and you know what you’re doing, it kind of solves the problem my generation is grappling with regarding financial security.”
Kaplan represents a growing demographic of young individuals who are diverting from traditional investment strategies in favor of higher-risk alternatives. This trend, often referred to as “financial nihilism,” arises from widespread economic anxieties characterized by soaring home prices, escalating loan debts, and a strained job market. Many young investors are willing to gamble on luck in a bid for financial success.
Simon Oh, an assistant professor at Columbia Business School, notes that this behavior reflects a rational response from young investors seeking to achieve financial goals that seem increasingly elusive. “Compared to the past, it has become much more challenging to accumulate wealth through traditional means,” Oh explained. “As a result, the logical step is to reach for higher rewards.”
The rise of sports betting and various speculative investments has gained substantial traction since the onset of the pandemic, with platforms enabling users to wager on everything from NFL game outcomes to celebrity news. Interest in cryptocurrencies has also surged, particularly among Gen Z investors, who are more likely than other generations to express curiosity about or intentions to invest in digital currencies, according to a recent U.S. Bank survey.
The stock market has not been untouched by this wave of speculative trading. The COVID-19 pandemic catalyzed the phenomenon of meme stocks, which saw notable rallies with companies like GameStop and AMC. Recently, stocks like OpenDoor and Kohl’s have joined the ranks of high-flying investments, demonstrating significant price appreciation over the past year.
In addition to traditional stock trading, the use of leveraged exchange-traded funds (ETFs) has surged, reflecting a broader appetite for risk. Data from VettaFi and Bloomberg indicates that the launch of new leveraged ETFs in 2024 has reached a 15-year high. Options trading has also experienced a strong uptick, with total contract volume soaring to 1.2 billion in August alone—a spike of 18% from the previous year.
Marcellous Donyae, a 22-year-old marketing consultant, turned to options trading about five years ago in a bid for financial independence while attending school. “I’ve always wanted to have a source of income that gave me a sense of financial freedom and control over my life,” Donyae remarked. “Options was just one thing that I felt gave me that.”
Despite the availability of these high-risk investing avenues, the underlying concerns of this generation remain pronounced. Rising housing prices and elevated interest rates have led to a diminishing hope of home ownership, which is traditionally viewed as a cornerstone of financial success. A recent survey revealed that nearly one-third of Gen Z members have abandoned their dreams of home ownership due to overwhelming costs.
Young people are navigating a tumultuous economic landscape marked by inflation stemming from the pandemic and a cooling job market. Even those who secure employment grapple with concerns about long-term financial security, compounded by increasing credit card debt and the resurgence of student loan payments. Economic commentator Kyla Scanlon notes that the expectations associated with traditional economic progress seem more far-fetched than ever, leading many young investors to adopt a gamble-first mindset.
Data from the University of Michigan underscores these sentiments, revealing that individuals aged 18 to 34 have reported the lowest levels of consumer sentiment among all age groups, reflecting a dramatic shift from past trends. Many young adults recognize that such high-risk investment strategies may not constitute a sustainable financial plan. Kaplan, while optimistic about the current profitability of his betting endeavors, acknowledges, “I don’t see this as a sustainable, long-term form of income. It’s been beneficial financially for now, and at some point, I’ll put it away and take my money and run.”
