For the highly charged millennials it is quite impossible to imagine a world full of new generation people not being curious about the latest features of Twitter or Facebook or not snooping about an all new version of an existing software application. But with the latest watchwords like ‘digital fatigue’ or ‘social media suicide’ catching up, we may expect a massive generation scene change not so far away. This too will have its ramification on the investment world as a whole.

Changing Patterns of Consumption and Investment

It has become a sort of right for every senior generation to whine about the changing behavior of new generation kids. The baby boomers used to complain a lot about the laidback and casual attitude of the Gen X toward life in general. Their criticism was particularly directed to MTV and pop culture and the typical Michael Jackson moves that the generation was fast adopting.

Coming to Gen Y or the millennials as they’re known today (present age ranging between 20–36 years), the Gen X (born 1964–79) started to look down on their mechanical behavior and fiercely competitive nature. They also used to lament about the all-round tech-savvy nature of this generation who were popularly known as digital natives who grew up witnessing major transferences in digital device.

At this point, the pattern of investment started to change dramatically. Internet was first introduced to this generation. And next came the age of social media in the guise of Orkut, which shaped lives online before a lot of us knew what social networking is. The much bigger ventures came next like Facebook, Twitter, Instagram and many more. And then the history of trade (read international) was rewritten with the introduction of a new channel of business called the e-commerce.

The highly tech-savvy, young and ambitious Gen Y, striving for newer and better things, came as a boon for technology, ecommerce and telecomm companies. Especially, this generation’s craze for smart devices has reached a level of frenzy.

However, according to many economists, it’s time to widen our lens, as every generation is taken over by the next. The post-millennial generation, popularly known as Gen Z or iGen, is coming of age faster than you know and will enter the income class in another five to six years. They are defined as cloud natives rather than their previous cohort who went by the name of digital natives.  

With its eldest population currently at age 19, Gen Z has already started to impact the market significantly ($44 billion annual purchasing power just with their pocket money). And it’s not only that. Data by sparks & honey shows that more than 25% of America’s population belongs to this generation, and with every single birth, this population is expanding.

So, it is clear that the business of tomorrow is in the hands of Gen Z, and if you are an investor who believes in the long-term steady returns to your portfolio, it is time you zoom out your framing from the concentrated Millennial set to this brand new generation.

Inside the Gen Z Mind Box

According to sparks & honey, “in many ways, Gen Zs are the opposites or extreme versions of Millennials and marketers need to adjust to them.” Market survey reveals that this resourceful and creative Gen Zs are out to contradict all that we know about the millennials’ behavioral pattern.

They are tech savvy, but that is by birth. They casually handle all smart gazettes, just the way the millennials used to handle all the advanced home electronics goods that were so exciting for the Gen X. So, even if most of the iGen candidates think that they should be provided with a smart phone just at the age of 13 (5 years ahead of their previous generation), they show no extra thrill while upgrading their Android to a newer version. Even though a newer and better Android model will float in the market, unlike their parents, they may show a laidback attitude unless they feel it’s truly needed.

What scares even more are their transforming social media and online habits. It has been noticed that the iGen’s entire allowance is spent online, apparently a good news for all e-commerce and gaming sites. But looks can be deceptive. According to Consumer Insights and Strategy Executive, Jayne Charneski, while Gen Ys were known for their excessive online consumption, Gen Zs are very much selective about their spending. Living an online life, they no longer need to be addicted to it. They treat online more as a tool for getting things done instead of a place to be discovered.

So, for long-term investors who vouch by the success stories and growth trends of premium market mammoths like Alphabet Inc. (GOOG Quick QuoteGOOG - Free Report) , Amazon (AMZN Quick QuoteAMZN - Free Report) , Groupon (GRPN Quick QuoteGRPN - Free Report) or eBay (EBAY Quick QuoteEBAY - Free Report) , there is a caveat. The growth curve of these companies may radically change in the coming years unless there is a massive makeover in their business models.

For the post-millennials, reports show that this generation is going to excel in creativity. They would rather make their own stuff than follow others and share the popular and, hence the clichéd, on their page. Accordingly, retweeting and pinning will be lesser heard words for investors in the future. iGen will instead be seen to take pictures and add their own color to it. So while Twitter’s core concept may face a setback, Instagram or Pinterest may flourish more than ever before.

And yes, this generation-next is much too private and definitely not interested in hovering around other people’s profiles. The number of Gen Ziers quitting Facebook in recent times should ring the alarm bells for this social media giant. Investors too need to be on their guard.

Instead of social networking, recent trends show that Gen Zs are obsessed with Snapchat, a popular self-destructing messaging application, where they can temporarily share their messages to a self-selected set of friends. Snapchat is currently estimating 2016 revenues in the range of $300 million to $350 million, a huge jump from its 2015 number of $50 million. This networking site is expected to go public any time this year. We believe potential IPO investors should not miss out on the chance of getting hold of this company.

Futuristic Thinking

The scope of long-term growth is enormous for firms that form a part of the Gen Z lifestyle, even if these companies are presently at a fledgling stage. This of course does not call for a complete overhaul of your portfolio, as the Gen Y population still contributes the lion’s share of the total U.S. income, and they will continue to do so at least for another 10 years (till their respectable mid age and till the early part of Gen Z’s work life). Under such circumstances, we believe it is ideal to pick stocks from varied generational preferences which will serve as a hedge against uncertainty. After all, you still don’t know how Gen Z likes and dislikes will evolve over the coming years.

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