How Much Money Gen Z Will Have by 2050 If They Start Investing Now

A Hispanic woman of the Millennial Generation is looking at her financial statement while eating lunch at a local sushi restaurant.
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Gen Z is the youngest generation of current investors, with its adult population ranging from 18 to 25 years old. However, according to research from Morgan Stanley, this will be the largest generation by 2034, meaning the investment ideas Gen Z has today could well be the driving force for how America will look in a relatively short time.

This digitally aware generation grew up in an age of smartphone and money transfer services and is rapidly pushing the envelope in fields like social media and green energy. They are well-educated and more ethnically and racially diverse than previous generations, and they are also less nationalistic, on average. This combination of factors could very well have a major change in how the investment landscape looks going forward. 

Of course, at such a young age, Gen Z also tends to have smaller amounts available for investing. Fortunately, the biggest advantage for this young generation is that it will be able to take advantage of the long-term effects of compound interest. In short, even a small amount invested today could grow into a large amount in the future, a fact that all Gen Z investors should contemplate. 

In order to show the powerful effect of compound interest in black and white to Gen Z investors, GOBankingRates calculated how much money Gen Zers could have by 2050 if they started investing now, using a relatively conservative 5% annual return. This 28-year time span would put current adult Gen Zers at 46 to 53 years old, far earlier than traditional retirement age but an age at which proponents of the FIRE movement — for “Financial Independence, Retire Early” — might be targeting.

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Obviously, the results could be much more impressive if Gen Z investors sock away more money and/or achieve a higher rate of return, but this small, conservative example is being used just as a demonstration of how powerful compound interest can be. Take a look.

How Much Money Gen Z Could Have in 2050 by Investing Now

Based on the GOBankingRates calculations, here’s how much Gen Z could have in 2050 by investing specified amounts at a 5% annual return:

Amount Invested 2050 Return on Investment
$500 $1,960
$1,500 $5,880
$2,000 $7,840
$2,500 $9,800
$3,000 $11,760
$4,000 $15,680
$5,000 $19,600
$6,000 $23, 520
$7,000 $27,440
$8,000 $31,361
$9,000 $35,281
$10,000 $39,201

How Can Gen Zers Maximize Their Investment Returns?

Even if you’re planning on retiring early, if you’re a Gen Z investor you still likely have somewhere between 20 and 40 years to build your nest egg. That’s a significant amount of time. Two of your best friends in terms of achieving this goal are compound interest and your company’s 401(k) plan, if you have access to one. 

As of 2022, the maximum contribution you can make to your 401(k) plan is $20,500. But on top of this, you may have access to an employer matching contribution as well. Many larger employers match 50% or more of the first 6% of a worker’s contributions to a 401(k) plan. This means if you earn $50,000 per year and contribute $3,000, your employer will kick in another $1,500. This is the closest thing to free money that exists in the investment world, and over time, those contributions can add up.

Imagine if you max out your 401(k) plan at $20,500 per year and your employer contributes an additional $1,500 per year. After 30 years — when you will still be in your 40s or 50s — your account will be worth at least $660,000, even if you don’t earn a single dime on your investments over those three decades. In reality, your account is likely to breach the $2 million mark, given average historical market returns.

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The Bottom Line

The most important step you can take if you’re a Gen Zer and you want to build a sizable nest egg is an easy one: just start. Over time, the compounding effect of investment gains can turn relatively small sums into large ones. Although this process can take decades to have the most pronounced effect, you have the benefit of youth in your corner.

The best part is, thanks to this time, you don’t have to take wild, speculative chances with your money to end up with a large pot of money by the time you retire. Simply invest what you can consistently, aim for reasonable returns, take advantage of “free money” like a 401(k) employer match and let compound interest do the rest. 

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