Key Points:
- Younger Americans are increasingly turning to high-risk investments like crypto, meme stocks, and prediction markets.
- A study shows that 80% of Gen Zers who choose risky investments feel like they are falling financially behind.
- Financial experts warn that many of these alternative investments act more like gambling and carry negative expected returns.
- Nearly 25% of American adults currently invest in cryptocurrency or are actively considering investing in it.
Younger Americans feel they are running out of traditional options for building wealth. A pervasive sense of financial nihilism is driving Gen Z and millennials toward high-risk alternative investments. Rather than investing their money in slow-growing mutual funds or bonds, these younger generations are flocking to cryptocurrencies, meme stocks, and volatile prediction markets. They truly believe these risky bets offer better odds of meeting their financial goals than the stock market strategies their parents used.
The numbers behind this shift are staggering. Northwestern Mutual recently released its Planning & Progress Study 2026, which surveyed 4,375 Americans in January. The study revealed that three-quarters of millennials and a massive 80% of Gen Zers who choose risky investments currently feel financially behind. Because they feel trapped by high living costs and student debt, they believe speculative investments provide the only real path to wealth.
However, traditional investing experts are waving massive red flags. They warn that many of these new high-risk investments are essentially just gambling. David Gardner, the co-founder of The Motley Fool, draws a hard line between investing and placing a bet. He defines real investing as investing in something that is expected to provide a positive return over time. In contrast, he notes that the expected return for any sports bettor is negative, and there is simply no mathematical way around that fact.
The line between investing and gambling recently blurred in a highly public way. In one shocking case, a U.S. Army Special Forces soldier currently faces criminal charges for using a prediction market. The soldier allegedly participated in a highly classified raid to capture former Venezuelan President Nicolas Maduro. Before the raid, he allegedly logged in to the prediction platform Polymarket and placed bets on the outcome of the top-secret operation.
Despite the risks, cryptocurrency remains the absolute most popular alternative investment. According to the Northwestern Mutual study, 24% of all U.S. adults either currently invest in crypto or are actively considering it. That number jumps significantly among younger demographics. Roughly 32% of Gen Z and 35% of millennials currently hold or plan to buy digital coins.
While crypto grabs the headlines, younger investors are exploring other dangerous waters in finance. The study found that 32% of Gen Z and 24% of millennials invest in or consider using sports betting apps and prediction markets. Another 18% of millennials and 17% of Gen Z dabble in highly complex options trading. Finally, roughly 14% of Gen Z and 13% of millennials still throw money at hyped-up meme stocks. By contrast, fewer than 10% of older baby boomers touch any of these four high-risk categories.
Social media plays a massive role in driving this risky behavior. Research shows that investors in crypto and meme stocks tend to be young men. These men often watch YouTube or TikTok videos in which other internet personalities boast loudly about their massive financial winnings. Tim Procita, a wealth management adviser at Northwestern Mutual, noted that social media heavily promotes a flashy, highly successful lifestyle. This constant exposure creates a massive fear of missing out among younger viewers who feel stuck in their daily lives. Procita added that his young clients often view these alternative assets as a cheat code to get rich quickly.
The push toward alternative assets also has support from the very top of the government. The Trump administration actively pushed to give everyday American retirement savers easier access to alternative investments, including private equity funds and crypto. President Donald Trump himself is heavily involved in the space, planning to deliver the keynote speech at a massive crypto conference at his Mar-a-Lago Club on April 25.
Caleb Silver, the editor-in-chief of the financial journalism site Investopedia, offered his own perspective on the changing landscape. He noted that even though bitcoin prices plunged significantly in late 2025 and early 2026, crypto remains a highly meaningful asset. He believes digital currency will absolutely remain a part of the global financial infrastructure for the foreseeable future.
However, Silver draws a sharp distinction between prediction markets and sports betting. Since a 2018 Supreme Court decision effectively legalized sports betting, Americans have wagered nearly $450 billion on games. Prediction markets take this a step further, allowing users to bet on almost anything, from whether the Federal Reserve will raise interest rates to who will win a reality television show. Silver warns that betting on a single outcome to turn a quick profit is fundamentally different from investing for the long term.
Meme stocks represent the final piece of the high-risk puzzle. Retail investors often use social media to irrationally bid up a struggling company’s share price just to generate hype and make a quick profit. While some of these meme stocks have briefly skyrocketed 1,000% or more, they never last. Silver pointed out a harsh reality: because these stocks rise entirely on hype rather than actual financial performance, every single one of them eventually comes crashing back to Earth, often wiping out the retail investors who bought in too late.
