Helping Teens Double Down on Long-Term Investing

Designed for instant gratification, betting platforms are increasingly luring younger investors away from long-term wealth creation. Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research, explains how you can help steer younger generations toward the latter.

"Gambling is all about luck. No amount of fundamental analysis or research can improve your outcomes over time—you either win or you lose. Even a win is often just a one-time event. The entire enterprise of gambling is designed so that, in the aggregate, the betting platforms come out ahead.

"In a lot of ways, investing is the opposite. You're exchanging your dollars for an ownership stake in something tangible. The price of a single stock may go up or down, but on the whole you're offered a path to potential long-term wealth creation, backed by companies that are incentivized to perform well so their investors can also succeed."

"Financial literacy is improving, but investment literacy still needs work. Gamified investing platforms and betting apps emphasize short-term thrills and the promise of a big payout rather than the importance of building wealth over time.

"This issue is compounded by what's called a 'vibepression'—an economic term for the gap between strong national economic data and low public confidence. A recent study suggests that up to 80% of Gen Z investors turn to high-risk or speculative investments simply because they feel so financially far behind.¹ When traditional milestones like homeownership look out of reach, high-risk speculation can seem like the only path to wealth."

"The danger isn't necessarily the activity itself; the problem is when it's viewed as investing rather than entertainment. If you want to set aside a small pot of money that you're entirely comfortable losing—meaning it won't negatively affect your daily financial life or retirement goals—that's fine. But studies show that dollars diverted into betting platforms are often pulled directly from savings and investments.² That's the real risk—that you could be undercutting your future."

"Talk about money at home. Open discussion can help dispel common myths, such as the idea that you need a lot of money to start investing. That's simply not true. If you've got $5, you've got enough to invest.

"More important, show how one can achieve long-term financial goals through your actions rather than judge with your words. Don't lecture or frame gambling as a moral failing. Instead, walk them through real-world examples of what potentially wagered dollars could grow into if put into productive assets. For example, $100 invested in an S&P 500^® ETF at the start of 2020 would be worth approximately $250 today—a total return of about 150%, even if past performance is no guarantee of future results.

"And remember, you don't need to have all the answers. In fact, learning alongside your kids or grandkids and guiding them toward credible financial resources is a great way to reinforce that real wealth is built through knowledge and discipline, not luck."