Latest / Black Box Theory Podcast / BBT #12 Snippet | Gen Z Isn't Bad at Money
Transcript
- Malcolm: Every financial advisor, ⁓ they'll tell you that the sports betting, the prediction markets, ⁓ meme coins, this is a stupid, rash decision. But what if, not saying I do it or Thomas does it, but what if for specific generation at a very specific moment in time, they're actually the more rational choice compared to the typical invest in the market, leave it untouched for 20, 30, 40, 50 years with an 8 to 12 % return each year. That's not a comfortable question, but it is the right one. So before we even dive into any what's right, what's wrong, what's smart, or what's not, let's just kind of like just lay the land with a couple quick facts. So Gen Z on average, according to Northwestern Mutual Planning and Progress, a study they did, Gen Z carries on average $94,101 in personal debt. This is the highest of any generation and nearly doubles millennials at $59,181. Only 11 % of Gen Z investors hold a retirement account and 42 % hold crypto, once again, according to Northwestern Mutual. 32 % of Gen Z are currently in or considering prediction markets and sports betting compared to 24 % of millennials. 80 % of those investors say they're doing it because traditional investing can't get them where they need to be fast enough. And a 100 trillion crypto derivatives boom is being fueled specifically by Gen Z financial nihilism. The racial wealth gap at current rates of conventional investing closes in over 200 years. according to the Federal Reserve. So the question we have here, if the system was designed so that doing everything right, i.e. dumping 20 % of your salary into the market and just leaving it untouched, at what point does the responsible financial choice become the irrational one? Now, my take on this, I think that there is like, I think that one generation and just the way you were brought up and the way you were introduced to money, I think plays a huge part in how you answer this question. Because I think that if you talk to anybody over the age of 30, they would laugh at a question. They wouldn't even take a question like this serious, unless you're gambling addict. But most people would listen to this and be like, older people at least, they'd hear a 401k investing in the S &P, a high yield savings account compared to ... Thomas: Yeah. Malcolm: betting on whether Trump will say a word in his speech on Kalsi, ⁓ what is it, Kalsi? Kalsi? I didn't notice it. Yeah, Polly marker, all them like, they would laugh at a question like this. I asked one of my boys that puts in a slip every day on yoghurt, getting 10 rebounds, he'd be like, bruh, tell me to, probably, so that is another thing. And I think that- Thomas: ⁓ was it Polymarket? Er, no, don't even know it's Malcolm: I think that another kind of like underlying reason that thing, and we have touched on this before way in one of our way earlier episodes, but I would imagine that Gen Z is more inclined to the quick, the get rich quick schemes because I think that our generation has, like I don't want to say unfortunately, but because of the rise of social media and the access that we can seem to other people's lives, stuff like that is just always kind of like. plastered on our feet in front of our faces at all times. All we see growing up to now and still now, we see people who are insanely rich, who got rich at 18 and 19 at 20 years old doing whatever, whether it's through streaming, through betting, through owning a business, through owning a clothing brand, doing YouTube, whatever. We've seen all these, like these plethora of kind of like unicorn individuals and we've unfortunately kind of like established that as the standard. And like I said, this is, you can go back on our page. like one of the very first clips you posted it was about when I was talking about how like people think that their failure at 21, 22 because they don't have a Lambo yet. This is another subsection of that topic right. Now when it comes to is gambling smarter than a 401k right now I think that entirely depends on your position. I personally would not pick gambling over investing into a retirement account, but that's also because I'm in a position where I don't necessarily I'm blessed enough and I'm fortunate where it's like a retirement account is really an option for me. Because I think when you ask questions like these, lot of people don't realize that lot of people don't have even have retirement accounts as an option. Like people, like one of the, when I hear people say this and they say it like it's just the most obvious thing in the world, like, duh, like invest your money in the market in the S &P, you'll get your returns back. But a lot of that is like, assuming that people have that money left over to be able to invest in the market. A lot of people live paycheck to paycheck. Thomas: at a time. Malcolm: and don't have the luxury like I think like people don't realize like investing in the stock market that's a luxury. That's not a that's not just a given that every American every person in world has access to like everyone can just drop you know a ton of money into the market and just let it compound over 10, 20, 30 everyone doesn't have that luxury. like if you're telling if you're telling someone hey if you get this slip right you can get $100,000 today versus some financial advisor telling you hey Thomas: Yeah. Malcolm: I need you to put in this money that's going to put food in your kids back, food on the table for your family, keep the lights on. If you put in the market today, guess what though in 35 years, you'll have $300,000 to your name. It's a luxury bro.