Gen Z and millennials are jumping in earlier than their parents did, armed with mobile trading apps, fractional shares, and a constant stream of tips from financial influencers on TikTok or X. 

As a result, sentiment can now turn into price action much faster than in the past. That has made the market more accessible, but also more jumpy, with meme stocks, dip-buying and frequent trading all adding to volatility.

Meme stocks like GameStop show how social media hype can send prices soaring or crashing on sentiment alone, not just company results.

What this means for investors

For older investors planning retirement, that creates a trickier envrionment. Traditional assumptions about a smooth 60/40 portfolio are less reliable when stocks and bonds can fall together.

Subsequently, many advisers are now considering alternatives such as commodities and private equity to improve diversification.

Gold or other raw materials, for instance, can hold up when shares tank, while private equity offers steadier long-term returns less tied to daily news.

The aim is not to chase every trend, but to build a portfolio that can cope when markets are driven more by headlines and online chatter than fundamentals.

So how can British retirees combat this change?

Cushioning volatility

One option for UK investors to consider is a low-volatility global ETF such as the iShares Edge MSCI World Minimum Volatility ETF (LSE: MVOL). It’s built to track the MSCI World Minimum Volatility index, which spreads money across developed markets and tries to keep overall swings lower than a standard world equity fund.

In practice, that means exposure to large, profitable companies across 23 developed countries, rather than a narrow bet on one theme or one sector. Think household names in healthcare, utilities, and consumer goods that keep bringing in revenue even when tech stocks wobble.

Recent data suggests the fund is doing its job reasonably well. Its annualised total return over a 10 year period is 7.17%, with volatility 15% lower than its benchmark index. That doesn’t make it risk free, but calmer than many broad stock funds.

The fund also has a low ongoing charge of 0.3% and a physical, sampling-based structure, which keeps costs and tracking mechanics fairly straightforward.

There are still risks. Minimum-volatility funds can become sector-heavy, leaning too much towards defensive sectors such as healthcare, utilities or consumer staples.

In that way, they occasionally lag badly if cyclical shares or growth stocks surge. And they’re not bond substitutes — they can still fall in a broad market sell-off, while currency conversions compound this risk.

Long story short

The bigger lesson is simple. Younger investors have helped create a faster, noisier market, but that doesn’t mean retirees should just stuff their cash under the mattress. It means being more deliberate.

A diversified low-volatility ETF can be a useful anchor as an allocation in an income or growth-focused portfolio. 

To me, stocks still offer the best opportunities when it comes to wealth generation, but it never hurts to aim for less volatility.

The post Young investors are taking the stock market on a rollercoaster ride. Here’s how retirees can buckle up appeared first on The Motley Fool UK.