72% of Gen Z Investors Reshuffled Portfolios Ahead of Midterms

Seventy-two percent of Gen Z investors have already changed their retirement savings or investment portfolios ahead of the November midterms, according to a survey from the Nationwide Retirement Institute. Just 17% of Baby Boomers said the same.

The gap sounds like a stampede for the exits. It isn't. About as many Gen Z investors added money to exploit current conditions as moved into safer investments, the survey found. The first generation to grow up with free trades on their phones is treating the election as a market event — Boomers are treating it like weather.

Across all generations, 40% of investors have made changes before the election on Nov. 3, which will determine which party controls either chamber of Congress.

Why are the generations reacting so differently?

Boomers' patience may owe less to hard-won wisdom than to where they sit in life. Most boomers are drawing down their savings or close to it, so a portfolio "change" for them usually means selling. They're also more likely to already have professional help: 43% of Boomers have an adviser, according to Northwestern Mutual.

There's a tax angle too. For shares held in taxable accounts, holding until death lets heirs skip the capital-gains bill entirely. Sitting still, in other words, can be a strategy.

Gen Z faces none of those constraints. The friction between a headline and a trade has essentially vanished for them.

"Younger investors came of age in an environment where investing is highly mobile, social and increasingly real-time, so adjusting a portfolio can feel less like a major decision and more like an ongoing process with almost no friction between a headline, an investing app and a potential portfolio adjustment," Mark Hackett, chief market strategist for Nationwide's Investment Management Group, told Fortune.

That accessibility cuts both ways. Younger investors enjoy unprecedented access to financial information — and unprecedented opportunities to make impulsive decisions based on breaking news rather than company financials or economic analysis.

"The question, therefore, is less about risk tolerance or volatility, and more about whether greater access to information is improving decision-making or simply increasing the temptation to trade," Hackett said. "The latter can be fatal for portfolio longevity."

"For younger investors, frequent portfolio changes can interrupt the power of compounding over decades," he said.

Hackett added that younger investors aren't necessarily more fearful than older ones. They're simply interacting with markets differently, and reacting differently to the flood of financial information and trading tools at their fingertips.

What do the advisers recommend?

The survey, conducted between late August and early September, polled 2,029 American investors with at least $10,000 in investable assets plus 538 financial advisers and financial professionals.

Despite the potential for midterm turbulence, the professionals surveyed say stay the course. More than half said maintaining an existing investment strategy is generally the best approach during an election year.

The market's track record explains why. Since 1950, the S&P 500 has consistently risen in the 12 months following midterm elections, returning gains of 15% on average, according to J.P. Morgan Asset Management. Past performance doesn't predict future results — but selling into uncertainty can itself be a gamble.

Hackett recommends investors keep a diversified portfolio and rebalance only periodically, depending on their desired risk exposure.

Not every change is a mistake, he cautioned. Adjusting investments to reflect personal financial goals, changes in risk tolerance, or shifting income needs are legitimate reasons to act. Caution, though, should govern the rest.

"Investors should be careful not to mistake a source of uncertainty for a source of lasting impairment to long-term returns," Hackett said.

The takeaway is blunt. Gen Z's portfolio tweaks are mostly tactical, not panicked — but with 15% average post-midterm gains on the board since 1950, the cheapest move this cycle may be the one investors don't make.

By Grace Kim