Millennial ownership of stocks has jumped, but they still only own 2.5% of the market even as the pandemic spurred a wave of new investors

• Millennial investors own just a small percentage of stocks compared to older generations.
• The young investors have yet to enter their peak earnings years and have other high costs to manage.

Even though young retail traders have made headlines for charging into financial markets amid the COVID-19 pandemic, they still own just a small percentage of stocks.

Millennials, who are 25-40 years old, own about 2.5% of stocks, equating to about $1 trillion, according to Federal Reserve data from the second quarter this year.

Though "trillion" sounds like a lot, put it in perspective: Baby Boomers own 55% of stocks, representing holdings worth $22 trillion; and Gen Xers own 26%, or $10.5 trillion.

Gen-Z stock ownership wasn't tracked by the Fed, likely because it's a "drop in the bucket," said Motley Fool analyst Jack Caporal.

"The older generations, the ones that have had a longer time to build up the wealth and let their investments sit and grow, they're kind of the big fish, even though the retail trading revolution is real," Caporal said.

Still, young retail traders have made their mark on the financial markets this year, most notably by driving record gains in once cheap equities like GameStop and AMC, creating a new asset class called meme stocks.

A revolution in retail access to markets via trading apps may be behind the meme-stock mania and its daily volatility. But the data show the majority of Millennials are likely investing for the long-term, Caporal said.

"If you look at the overall trend going back, even before the pandemic, in terms of Millennial investors and their share of stock ownership, it's steadily increased," Caporal said, noting that in early 2019, the cohort owned about 1.8% of stocks. "And what that says to me is that by and large Millennials are buying and holding, and they're not just trying to day trade."

What might be in the way of Millennials investing in stocks could be the high prices of equities, along with rising costs for college tuition and homes despite slower wage growth, Caporal said.

Even so, as Millennials enter into their mid-40s and their peak earnings years, their share of stock ownership will likely continue to rise, he added.