Ep 17: What we can learn from Gen Z investing featuring Mary Esposito

Gen Z has entered the chat, finance and social media have intersected. In 2022 43% of retail accounts where opened up by investors ages 18-35. Resulting in a surge of HYSA and Money Markets… which perform well in a high interest environment. Pair this with the rising trend in financial literacy (there is lack of literacy but a surging increase in interest) and you are met with better expense management and savings practices. This shift in retail participation has not only changed the way information is disseminated but also influenced market dynamics: The result, a resilient consumer, and a new market dynamic puzzling WallStreet.

In this episode, we learn how Gen Z invests and the market impacts. Discuss tools, resources and even a quick stock market update discussing inflationary concerns. Mary provides remarkable insights into Gen Z's investment strategies, the power of social media in financial education, and how a generation's approach to finance can reshape the world of finance and investing. Plus, don't miss the Halloween twist, as Mary joins the conversation dressed as Taylor Swift, Jessie as herself (jk just spookier), and Jess as Mr. Monopoly.

Episode Equity

About Mary Esposito: 

Mary is a TikTok sensation and Instagram influencer, renowned for her engaging content and passion for personal finance. She's not just a financial literacy advocate; she's also a talented knitter whose creations fly off the shelves - you can shop her creations at shoppurplepear.com. As a business student at UNC Chapel Hill, Mary's platform is firmly dedicated to financial literacy, aligning perfectly with Market MakeHer's mission to provide free education and resources.

Connect with her: 

Jessie's Questions

Episode Transcript

Jessie: Welcome back, Money Coven. You're listening to Market MakeHer, the self-directed investing education podcast that demystifies the stock market by breaking down complex topics from her perspective. We're your hosts or ghosts with the most. I'm Jessi DeNuit, your strange and unusual guide on this investing journey, asking all the questions you were thinking because I'm mystical like that.

Jess: I'm Jess Inskip what we refer to as the finance expert. And I do happen to have about 15 years of industry experience. And today we have a special guest that we are so excited about and have been following on TikTok for a while now. Mary Esposito, AKA Money with Mary, just a little bit about you for our listeners. Mary is very, very big on TikTok. She's also on Instagram. She's also an amazing knitter and has this entire lineup that you can purchase. They sell out very, very quickly. She has a super strong interest in personal finance. She is a business student at UNC Chapel Hill. She really has this social media platform that is geared towards financial literacy, which is something we totally vibe with. You know how we feel about the financial influencer space and how we're here to provide free education and resources. And Mary totally fits in. our mission to financial literacy. So thank you so much for being here, Mary. We're so excited.

Mary: Oh my gosh, thank you so much. I am so excited.

Jessie: And we should probably mention that you're dressed up as Taylor Swift today, which uh...

Mary: Correct, correct. I was instructed to arrive in a Halloween costume. And so I am Taylor Swift.

Jess: Which is amazing. Jessie is her usual self today. She did not dress up.

Jessie: Yeah, it's a regular Thursday for me and I forgot that it was Halloween.

Jess: I found a Monopoly hat.

Jessie: Yeah, Mr. Monopoly over there.

Jess: So today. We decided since we have the lovely money with Mary, we're gonna talk about Gen Z investing. We haven't had an episode as to exactly why I gave up my financial licenses, but a lot was behind it... when the whole GameStop and Meme stock fiasco happened, COVID happened, all of the sudden investing became a trend. I think a lot of that had to do with social media and TikTok and how the younger generation, that's how they find information. There's more retail participation than ever. So now when we're accounting to what's happening with the stock market from an analyst perspective, normally you would look at institutional flows, which are like mutual fund managers and money managers, and where those fund flows are going because it dominates the market. This increase in retail participation, largely fueled by Gen Z, actually has a lot to do with how the market is moving. GameStop is such a great example. Lots of buyers over sellers without the valuation makes the stock market go up. It's all supply and demand. Where Gen Z is looking and how they're investing is super important, not only for the financial literacy aspect, but overall market mechanics. We thought the best expert to get an insight into this wonderful generation is Mary.

Mary: Thank you!

Jess: You represent this generation. You are, you are it.

Jessie: Where do you seek out information about how to invest and like, how did you learn about investing? Mary: Well, I actually stumbled across a book. I had a crochet business. I did it all throughout high school, I still do it, but I was making money from my crochet business. I had this money, I didn't know what to do with it. And that's when I got introduced to the concept of investing. I checked out a book from the library, but I know a lot more people have actually gotten into investing. just from seeing it on social media, specifically TikTok in general, because just the digestible format that people can just create that kind of content.

Jessie: You said anyone can get on there and post videos, but we don't always know who's actually on there and knowing what they're talking about, where we're getting your information from. If you're licensed, you're not actually allowed to go on TikTok and talk about investing information or education. A lot of Gen Zers say they trust Reddit. Are you on Reddit?

Mary: You are referring to the infamous Wall Street Bets, I joined it. They told me to buy Palantir about three years ago. I did. It sucked. So, am I on Reddit? Yes, but for our confessions, not for our investing. You know what I mean?

Jessie: Yeah.

Jess: So I always encourage people to do their due diligence, which basically means like... do your own research. The way that I view financial content on social media is they play the idea in my head, now it's up to me to go and do the research, right? So that's how I found out actually about iBonds was from a social media video. But then I went and I was like, okay, let me actually Google what is an iBond and figure this out on my own.

Jessie: Which is smart.

Mary: I think that's the best most constructive way that I view social media.

Jess: Not everybody who's on social media that talks about investing is bad. Like I love the way I say, learn with me or do your research or things like that. Where do you go get your research? So you start with Googling. So you get an idea on TikTok. You found iBonds, then you Googled what they were or even with Palantir or you find a stock. What's your next step? So curious. No wrong answer.

Mary: Yeah. I never do anything without going to Google. So I prefer, yeah, I prefer just like searching online as opposed to books, just because obviously like that's the most up to date stuff. I've used Motley Fool. to evaluate specific stocks, but I'll also, honestly, I'll pick at least three different links and I'll read the opinion pieces on at least three because then I feel like, okay, I'm not just getting one person's opinion. What do all these people think? And then in general for investing terms, oh, what is a stock? What is an ETF? Investopedia.com.

Jess: I do love that.

Mary: Yeah.

Jessie: Yeah, they've got good information.

Jess: So I love the varying opinions. So you probably land on like a news network. Can I ask what brokerage firm you use? Is that an okay question?

Mary: Yes! So I use Fidelity. I have my Roth IRA with Fidelity. And then I also just have like a regular brokerage account, which I contribute like monthly. And I have automated payments into both.

Jess: That's amazing. So ahead in life.

Jessie: Yeah. So on top of it. Gen Z is going to rule the world.

Jess: So Fidelity though, they have a ton of research. Every stock, every fund. has an analyst rating. We always talk about the how to do it yourself. So when analyzing a stock, like how to look at management, how to look at earnings, how to look at revenue, we go into how to do it yourself, but call it the hard way and the easy way is analyst opinions. Those are free at Fidelity and every [mostly] single brokerage firm. And I think that it would be a great place for you to look at stuff. In addition to the news and stuff, analysts, they'll be like, OK, I think you should buy this stock because of x, y, and z. I expect revenue. I have expectations by this time. and they'll give you a price target, which is normally like 12 months.

Mary: Where can you find that? Is that within the app or is it on their website?

Jess: I don't know if it's in their app, it's on their website. We can screen share. I just pulled up Apple. I don't know why we always pull up Apple. You just plop in a symbol and then analyst ratings right here.

Mary: Oh my gosh.

Jess: They net them together. So this is by Refinitiv, which is one of my favorite data companies of all time. They actually have the best earnings review too. This one's good because they've got... Contributing opinions to their score is based on accuracy. There are so many analysts, like see how many research reports are here, and their accuracy that will help determine the equity summary score. It tells you if it's a good buy or not. There's so much that's here for free.

Mary: I'm looking in my app. I have the equity summary. So I see now what you're talking about. They give, they assign the scores. Apple Neutral, 6.9, Airbnb, Bullish, 8.3. So for anybody who's listening who has the app, you go into your click on your specific account, you scroll down to positions, and then you toggle details and then scroll all the way to the far right and there's the equity summary score.

Jess: That's beautiful.

Jessie: Do you find the Fidelity app easy to use?

Mary: Yeah, I find the app very easy to use. And I think a lot of people use Robinhood just because the whole GameStop thing like you were talking about, that was like Robinhood was directly in the center of that. I feel like Robinhood is also like gamified investing and that also ties into a lot of retail investors.

Jess: I don't hate Robinhood because again they got a younger generation to start investing and I think that is amazing and that's wonderful even though they accepted payment for order flow but they got commissions to zero and that opened the doors for fractional shares and a lot of other things. So they still did some really great stuff for the overall industry.

Mary: I agree though. I feel like fractional trading. I've utilized that feature so much on Fidelity. I will say that one thing I wish that Fidelity did was allow you to automate. And I guess you could tell me if I'm wrong, but I've been able to automate transfers from my bank account straight into index funds, but not into stocks.

Jess: No. So they do have a system for that. It's called direct indexing. We haven't had an episode on that. I would like to have an episode on that, because I actually want to put my son's account in it. It costs $4.99 a month.

Jessie: Do you have a strategy for how you invest in your non-retirement fund?

Mary: For my non-retirement or retirement?

Jess: Do you invest differently actually in either? I like this question.

Mary: Yeah, actually I do. Yeah, I can talk about that. Yeah, I have my Roth IRA and I max that out every year as soon as possible. Go ahead and start making me money. You know what I mean? Smart. Within that, I have a couple blue chip stocks, stocks that just have like reliable performance and pretty good profitability over time. Microsoft, maybe Google, Apple. off the top of my head, but the majority are actually ETFs. So for example, I'm in SPY, or that's the ticker SPY, or the ticker, the symbol. I'm like, okay, quick. Yeah, so I'm in SPY, I'm in a couple of Vanguard ones. I also automate investments into the Fidelity blue chip growth fund. So I take a more conservative approach in my Roth IRA than I do in just my regular brokerage account. The biggest asset that we have is time. So if we have give or take 40 years until retirement, the average return of the stock market over time, 8 to 10%, just like over the past 100 years, right? And we have 40 years. So we can afford to take on a little bit more risk just because I had time to recover. And as a result, I have switched the proportion between index funds and stocks and I'm taking, you know, I'm in a couple like maybe riskier like tech sector kind of stuff. But honestly, I like to think of myself, I'm an entrepreneur first, investor second. I don't take a super active, active approach to investing. I automate transfers into my index funds. and then I'll just go in and I'll buy Apple, Microsoft, Google, Facebook, or Meta.

Jessie: You sound like an active investor to me. I mean, you're doing it for the long term. It's not like you're trading, day trading or doing trading. You're investing. It sounds like, I mean, that's pretty active. That's more than a lot of people that I know do. So that's pretty good. I think it makes sense for like Gen Z to own more stocks, but there was a statistic that 73 percent own stocks, making it the most common type of investment for this generation. Like you said, you have a lot more time, you can be a little riskier, but you are picking stocks that are like reliable, like there are the S&P 500, they've been around for a long time, they're blue chip. And I wonder like, do you think your generation, this is what I struggle with, it's like, cool, I have, I'm investing in all the things I'm supposed to invest in, I'm doing all the right strategies. Do you have a plan for as you get older, are you going to transition those yourself into other things? that are less risky?

Mary: Yeah, I can manually do that. And Jessica, you can check me on this, but does a Fidelity also offer a retirement plan? It costs money, right? But they will do that for you, where they will reallocate your positions.

Jess: Oh, I love this question, because we haven't talked about this yet. It's free. You can call Fidelity at any time and be like, hey, can you run me through? And they also have calculators. They do a retirement score, like your credit score. You can go in and do that. But yeah, it's totally free to go talk to a financial planner. And they will ask you what your income is and risk tolerance for you. You'll go through your assets and through your liabilities and then your investment horizon, time frame, all free. Every bit of it's free. You could absolutely do that for free.

Mary: That's incredible. OK, I didn't know it was free. I didn't know it was free.
Jess: But what I love is I totally, while you guys were having that conversation, decided to pull up the Fidelity Blue Chip Growth Fund and just curiosity. I'm giving Mary an A plus. and I'll give you the returns around this. So whenever you look at a mutual fund, we wanna make sure that it beats its benchmark and its category. So the benchmark for the Blue Chip Growth Fund, it'd be the Russell 1000. In the past year, that's been up 27%. The overall category would be Morningstar's large growth, which is up 23%, and the Fidelity Blue Chip Growth Fund has beat all of those up 33%. It's beat it on 10 years, it's beat it on five years, not on three years, but very, very close, and for the life of the fund. Whenever you buy a mutual fund, you're paying for expense ratios, and you want somebody to outperform their benchmark, which means it's worth it. So A plus Mary, that's a good pick.
Mary: That's my baby.

Jess: I love that

Jessie: Good job. Good job. It's a beautiful baby.

Jess: It's so good? I love that.

Mary: I think there's something special about the first investment that you researched and picked yourself. You know, I mean?

Jess: I do agree with that.

Mary: Yeah. There's like, oh, you know, my grandpa, it's only to do Apple. So I did. Or, you know, OK, like everybody say when it's out, but when you find like your own, it's like, oh, yeah, like this is mine.

Jess: I think it's so true. This is the beauty, I think, of Gen Z. And it's a market mystery too. Our generation or even the one before that. Traditionally, when the market goes down, it goes down even more because more sellers come in and those emotional traders like kind of shake it out. and you have capitulation moments, that doesn't happen with this generation. So you have an increase of market participation. You guys understand that it's on sale and you understand time, and so you'll buy more. I did that thing again where I used a lot of terms that I have to describe that Jessie makes me describe.

Jessie: I think, well, I don't think we've defined capitulation before.

Jess: It was coined from a term in the war times, as I would know, some Mr. Monopoly. It means like, given the flag. So all the sellers get out of the market. So it's when market bottoms happen, there are certain things that you see. You fall down the stairs, you climb up. So market fall downs are fast. So capitulation would be the volatility index is like way over 40. Like if I were to pull it up right now, you could just see it with every market downturn. You can call a bottom with very specific things. And that didn't happen this time. It happened at COVID, but it did not happen October 13th of last year, the week of October 13th. It was slow capitulation.

Jessie: I know I invested. It was like, it's on sale, buy the things.

Jess: The headlines right now are, we have a resilient consumer. Part of that is from boomers, because there's a lot of them and they're retired. But it's also Gen Z because financial literacy is a trend. Everyone has a high yield savings account. Do you have a high yield savings account? I bet you do.
Mary: Yeah.

Jess: People didn't have that in previous downturns though. People didn't have affiliates.

Jessie: And honestly, the high-yield savings accounts, the interest rate really went up the last couple of years. I never had one, because I was like, what's the point? It's hardly anything.

Jess: This is true

Jessie: And  it went up, mine got to almost 5% last year, I think.

Mary: Yeah, that's great.

Jessie: That is unheard of since, I don't know what, the 90s.

Mary: And I think the reason why, and this is great, is I think social media has definitely democratized. you know, like financial literacy, where it's made it free, accessible. I mean, and again, touching on the point with the high-yield savings account, I found out what a high-yield savings account was from TikTok. And then I did the research

Jessie: and you were like, let me look that up. What is this? Mary: That's so fact. Like I would have wouldn't have stumbled upon it otherwise. So I feel like social media is great in that, not just for financial literacy at any educational topic. Yeah.

Jess: That was a beautiful statement. Social media has a democratized. financial literacy. I don't know if you saw me on video, my mouth dropped. It was like, what?

Jessie: With your monocle on.

Jess: We kicked off earnings this week. Banks reported. It always starts with that. Then we get the regional banks. So we all freak out. Powell spoke today. That's why we all went nuts. It's like, side note, by the way, with Powell speaking and the Taylor Swift costume, my analogy that I have been waiting to do when we talk about Mr. Powell,

Jessie: Here we go.

Jess: I do a weekly Fidelity show and I had to write my comments for Fed Powell's speech. And so I was writing up my comments as he was saying it. And it literally, I was watching the person on CNBC. They're like, okay, well, this time he said achieve instead of should. And it's like, literally you dissect his words, like you're trying to put together a puzzle. And if you've ever ended up on Taylor Swift tok, you're literally like, this girl has changed her nail color to orange and it represents karma and that's what's coming next. And I'm just like, if you're a Taylor Swift fan, you're going to dominate the stock market. It's just the same thing. You're literally digesting. But Fed Powell, you're looking at Papa Powell to try to understand total tangent on where I was trying to go.

Jessie: People are trying to decode. So that you say people are trying to decode Fed Powell the way they do the Taylor Swift like words and.

Jess: A thousand percent. Including myself. Like you're literally-

Jessie: Well you're a Swiftie so that makes sense for you, but you think like that's what other people are doing too?

Jess: A thousand percent.

Jessie: Do you think the Fed is like, wow we should learn something from Taylor Swift and start putting a little like, hints out there?

Jess: No, no. They're not trying to market. They're trying to bring down inflation. But I do think it's just like- dissecting what Taylor Swift's going to do. Taylor Swift's doing something for marketing purposes, and also probably for the fun of it at this point. Fed Powell is trying to give you as much information as possible without telling you exactly what he intends to do because they have to be data dependent, you know? And certain things aren't within their mandate, unlike fiscal policy uncertainty and things like that. So he'll allude to it, but he won't directly say it. You got to get inside this guy's head.

Jessie: What do you think he's saying?

Jess: I think that he's done hiking interest rates. They're going to keep it where it is right now. And I think we just recovered from the great financial crisis. Everyone says interest rates are crazy, but they're right back where they were in 2007. So.

Jessie: Oh, Well, are we still in this issue where the consumer's too resilient and we're still spending too much and that therefore these companies are never going to like bring their prices down and this is our new standard where like this is just how expensive everything is going to be now? I'm getting very annoyed.

Jess: It's lag effect.

Mary: I have a conspiracy theory. I think that companies are using the current inflation. Like everybody knows things are getting expensive. When people ask, why are things expensive? It's always, oh, inflation. So companies are banking on this. And so they're using inflation, like you said, to like increase the price. They add on like a little bit extra and they just pass it off as like, oh, we're matching inflation.

Jess: Okay, adding to this, that is the definition of inflation is you're willing to pay that much. Companies will make the highest price possible that you're willing to pay. So if you're willing to pay higher, they're going to keep it higher. They're just going to do it. They're greedy. And when you talk about the stock market and you invest in a company, they make profits with higher prices or improving their profit margin, so like reducing expenses in some way, shape, or form. You always want that to expand. That is raising prices. And they will 1,000% do it, if you will buy it. I don't think it's a conspiracy theory. I think it is reality.

Jessie: That is what it is. Yeah. The alternative of not having higher prices that we're all paying is them potentially having to lay people off. They don't meet those profits because they have shareholders and all that. I mean, unless they can do things like incorporate AI or some kind of technology to help, everything feels so delicate. It has to be in this perfect balance and it gets shaken off so easily. God, I almost made a Taylor Swift reference. It gets disrupted. Very easily.

Jess: I love the little lessons you've learned about investing. Say you had a time machine and you went back to Mary, who started investing, what'd you say to her?

Mary: Diversify. Yeah. Just one, diversification is crucial. I put all my money in the tech sector because it was the fastest growing, like 2021. And I was like, yeah, this is awesome. You know what I mean? And tech stocks just plummeted. Over time, I've been able to just like, recover, and you know, bounce back, but diversification. And that's also why I make sure to invest in ETFs, because those are inherently diversified.

Jess: I love the thought on diversification that that's what you would say. And I think it's interesting that you said it was the tech sector. We weren't live during that time. But we would totally would have talked about the why. Like the why with the tech sector was the Fed was raising interest rates, and that subsequently makes a stronger dollar. And tech companies have higher exposure overseas. And so when you convert that back, it hurts their revenue. So they have the biggest hit. It kind of filters out a tech first. And then it moves into different sectors. So they would have come back. And we would have told you why. And you could have looked at it and see what you needed to see for that to happen, but also what you could see like, oh, that's about to happen. You can see rotation into... so many episodes we need to have on that. And same with diversification. But I think the same thing goes with investing. You're so scared to put yourself out there because you're afraid of the negative connotations in the outcome. But in all reality, the outcome could be really good, especially if you do your research and you do things right. And yeah, you're going to fail, but you fail upwards always.

Mary: That is so true. I like to think of it as three steps forward, one step back.

Jess: I like that.

Mary: Yeah. Like there's going to be high and lows, but as long as you keep working on expanding your skill set, the lows are a little higher every time.

Jess: Yes.

Mary: What is your long term goal? Well, my total goal. Okay, a million dollars total in the stock market, right? Assuming the average annual return of about 8 to 10 percent, let's just be optimistic, say 10 percent. Okay, 10 percent of a million is $100,000. Okay, pay your capital gains taxes and like whatever fees, like 100,000 it goes down to like 70,000. I can live off $70,000. So then it's to live completely off passive income. But then that just means that I have the time to just pursue something that I enjoy doing. I could work at a yarn shop or something, or like travel and social media. But now the pressure is taken away. And I can genuinely pursue it because I have that passion.

Jess: And that's why you invest in the stock market. Financial freedom is so valuable and important. I think you'll get there, Mary. I really do.

Jessie: Oh, yeah. You're definitely going to get there.

Jess: I think that's amazing. And I think that's why you'll have a head start. Anybody listening, and if there was just even one person where they started doing that, I think you made an impact. And that's amazing. So important.

Jessie: Oh yeah, That's really good advice. It was so nice to talk to y'all. It was so great. And also just like, you know, because there aren't a lot of women in finance, really, especially not alternative or even blonde. The whole thing. So. It was actually really affirming, you know, because people are like, I guess, how this conversation was to me is probably how people feel when they see me on TikTok. So. Jess: Really? Aw. Yeah. That's nice.

Jessie: I said it on episode one. This podcast is selfishly for me. I'm like, I want to know all this stuff. And I have no one to ask except Jess, and I don't want to force her to do it, but she loves talking about it. So it's just one of those things where I'm like, I bet everyone would benefit from us just talking about it as friends together, you know?

Mary: Yeah. Well, it's incredible what y'all are doing. Thank you so much. And I hope to stay in touch.

Jessie: Yes, please do.

Jess: Thank you, Mary.

Jessie: Thank you so, so much to Mary for being on the show today. And you can follow her @MoneywithMary on TikTok or Money With Mary and the number one at the end on Instagram [@MoneyWithMary1]. And we'll put that in the show notes. Also check out her crochet shop. It's so cute. It has the cutest little plushies. It's called @ShopPurplePear on Instagram.

Jess: Also, thank you to our listeners. We really enjoy demystifying financial literacy. I learned a lot today, and I hope you did, too. Help us on our mission to share financial literacy. Share this podcast with somebody that you think would find it beneficial. Leave us a comment. Leave us a review that helps the algorithm so, so much. And of course, if you need anything else, you know how to get a hold of us.

Jessie: And as always, when you build knowledge, you break barriers. Until next time.

Jess: break barriers.