From Nigeria to India, Generation Z uses apps to invest

  • By Nivrita Ganguly / AFP, MUMBAI, India

There is a new generation of investors in town. They’re young, they get their advice from YouTube, and they’re armed with apps that make the stock markets more accessible than ever.

US-based Robinhood Markets Inc has caused a stir in the West with its mission to open markets to “ordinary people,” but from Nigeria to India, Gen Z are flocking to local equivalents.

“I don’t really care about my college, to be honest. Everything is market, market and market, ”said Ishan Srivastava, a student in Delhi, who started trading in December of last year.

Photo: AFP

Srivastava uses a handful of Indian trading apps from companies such as Zerodha and Upstox, and often receives his financial advice from YouTube. The ambitious 20-year-old hopes to build a diversified investment portfolio and retire at 45.

In India in particular, the investment revolution has been aided by a boom in “demat” accounts – easy-to-open electronic accounts for holding securities, stocks or debt.

However, a similar craze for app-driven investing is also underway 8,000 km in Nigeria.

The country’s economic hub, Lagos, has long been known for its bustle and celebration of success, but the weakness of the naira currency has put additional pressure on young people to earn money as the cost of life has skyrocketed.

Nigerians have flocked to local apps like Trove and Risevest, which allow them to invest in U.S. stocks, widely seen as a way to protect wealth as the naira nightmare continues.

“I had the option of putting the money in the bank, but it seems less attractive month to month,” said Dahunsi Oyedele, 23.

“Sometimes I put my money into Risevest and get returns within a week. Imagine getting 1 or 2% return on 100,000 naira [US$244] every week – it’s small, but it means a lot, ”Oyedele said.

For a few months after losing his job as a tech journalist due to the COVID-19 pandemic, Oyedele covered his rent by trading cryptocurrencies.

He is far from the only one turning to speculation during the COVID-19 crisis.

In the United States alone, more than 10 million new investors entered the markets in the first half of this year, some of them attracted by the hype about “memes stocks” like GameStop Corp, said. JMP Securities LLC.

Globally, newcomers are largely young.

The median age of Robinhood’s U.S. customers is 31, while Upstox says more than 80 percent of its users are 35 or under, a figure matched by Bamboo in Nigeria at 83 percent.

Trading apps have lowered barriers to entry for young people in part by offering fractional trading. A stock of Inc, for example, is worth over $ 3,000, which is unaffordable for the average Gen Z or a slightly older millennial. Still, a small fraction of that share might be on hand, especially on an app that charges zero commissions.

Trading apps may have been hailed as a democratization of market access, but critics say they could also make it easier for young, inexperienced investors to get into the hot water.

The United States Securities and Exchange Commission is investigating whether apps irresponsibly encourage over-trade by using excessive email alerts and making investing a game.

The British Financial Conduct Authority also said in March that the new cohort of young investors – who in the UK lean in favor of women and minorities – have more to lose.

Almost two-thirds of new investors surveyed said “a significant loss of investment would have a fundamental impact on their current or future lifestyles,” the authority found.

Some young investors have already been burned. Mumbai-based product designer Ali Attarwala is giving trading a break after a bad experience with cryptocurrencies earlier this year.

“These apps make it easier to buy speculative assets like crypto, but there is still a lot of volatility in these new assets,” said the 30-year-old.

Srivastava has had its ups and downs as well, but sees his losses as part of the learning experience. “When I started I blew up almost 50% of the capital,” he said. “I don’t treat them like my losses, but like the tuition fees.”

Additional reporting by Segun Olakoyenikan in Lagos and Katy Lee in Paris

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