Listen to this articleSeventy-two percent of investors aged 21-43 believe it is no longer possible to achieve above-average investment returns by investing solely in traditional stocks and bonds, compared to only 28% of investors over the age of 44 that hold the same view. The 2024 Bank of America Private Bank Study of Wealthy Americans study reports millennials and Gen Z allocate three times more of their investment portfolios to alternative investments than older generations.
“We’re living through a period of great social, economic, and technological change alongside the greatest generational transfer of wealth in history,” says Katy Knox, president of Bank of America Private Bank. “Our study shows that wealthy Americans are focused on diversification, long-term goals, and making a lasting impact with their wealth.”
Where Younger Investors Are Putting Their Money
Millennials and Gen Z increasingly look beyond the traditional stock and bond markets to build wealth and drive demand for everything from investment real estate and private equity to digital assets and gold. Seventeen percent of their investment portfolios are allocated to alternatives, compared to 5% allocated by older investors.93% say they plan to allocate more to alternatives in the next few years.
Nearly half (49%) own cryptocurrencies and another 38% are interested in owning it. They rank cryptocurrency among the top opportunity areas for growth, second only to real estate investments.Forty-five percent own physical gold as an asset and another 45% are interested in owning it. Overall, 41% of the wealthy own (18%) or are interested in buying (23%) physical gold.
Ninety-four percent of those under the age of 44 are interested in collectibles. Millennials and Gen Z are at least two times more likely than older generations to be collectors of watches (46%), wine or spirits (36%), rare or classic cars (32%), sneakers (30%), and antiques (30%).
Eighty-three percent of millennials and Gen Z either own art or are interested in an art collection.Forty-seven percent of their portfolios are in stocks and bonds, far lower than investors over the age of 44 (74%).
“Cryptocurrency is not an asset class everyone should hold in their portfolio,” says Prakash Kolli from Dividend Power, a financial independence site. “It’s volatile, has regulatory and legal risks, and some exchanges and wallets have been hacked. Furthermore, not all cryptocurrencies are the same. They also do not have the same long history as gold or the U.S. dollar. That said, it’s a viable investment class, especially now that exchange-traded funds (ETFs) have emerged. However, most people should keep their allocation low and within their risk tolerance.”
Gen Z Turns to Social Media for Money Matters
Although 26% of Americans turn to a financial professional first for advice, it’s not the first choice of younger adults.
The 2024 Policygenius Financial Planning Survey finds adult members of Generation Z are 65% less likely to turn to a financial professional first with a question about their finances compared to baby boomers. Plus, Gen Z are nine times more likely than boomers to turn to social media instead.
The study also found:
Thirty-nine percent of baby boomers, age 59 to 77, would turn to a financial professional first when they have a question about their finances, compared to just 14% of Gen Z.
Americans earning less than $40,000 a year who would use financial professionals are 61% more likely to own real estate.
Americans who would turn to financial professionals first with money questions are 86% more likely to own real estate than those who would turn to other sources of financial advice.
Twenty-two percent of Americans ask friends, siblings, peers, parents, or older relatives first when they have a question about their finances.
Of the 5% of Americans who would turn to social media first with questions about their finances, 47% are millennials.
87% of Americans who turn to financial professionals first are more likely to view life insurance mainly as a way to provide for dependents in the event of their death and less likely to view it as mainly an investment.
Many admit they don’t know where to turn to for expert advice.
“These findings highlight a stark divide between where each generation gets their financial advice,” says Patrick Hanzel, certified financial planner at Policygenius. “Some financial advisors can come with costs, but getting unbiased financial guidance from a trusted expert can be invaluable in helping you understand your finances, including complicated products like life insurance, and reach your goals. If you prefer to start with a method like social media, make sure you vet your sources to be mindful of any biases or scams.”
This article was produced by Media Decision and syndicated by Wealth of Geeks.
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