Younger generations don’t have the patience to build wealth the normal way. From alternative music and alternative cinema, millennials and Gen Z have moved on to alternative assets. And they’re hoarding their way over the recommended amount. A staggering 31% of their portfolios are in alternatives, which would make most financial advisors gasp. But are they right to do so?
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Bank of America recently surveyed 1,000 Gen Z and millennial investors with more than $3 million in assets, excluding primary residence. The results were markedly different than their older counterparts.
A striking 72% of investors aged 21 to 43 “believe it is no longer possible to achieve above-average investment returns by investing solely in traditional stocks and bonds.” In contrast, only 28% of investors over the age of 44 share this sentiment.
And the youth aren’t just talking: They allocate just 28% of their portfolios to stocks, compared to 55% for older investors. Instead, they’re increasingly turning to alternative investments, which makes perfect sense from their perspective. How can you believe in the stability of stocks after they’ve crashed twice in your life? First in 2000, and then again in 2008. For them, investing your life savings in something that can disappear in a split second is only worth it if it offers greater potential gains. That’s where real estate, crypto, and private equity come in.
Trending: Warren Buffett once said, “If you don’t find a way to make money while you sleep, you’ll be working until you die.” These high-yield real estate bonds yielding 7.5% – 9% make it easier than ever to earn passive income.
Real estate: a solid foundation
Conventional investment categories include stocks, bonds, and cash, making real estate an alternative asset. With the volatility of the stock market, real estate offers a tangible asset that can provide steady returns over time. Historically, it has been one of the safest ways to build wealth if you have the patience to wait five to 10 years. Real estate investments can range from residential properties to commercial real estate, and investing in them has never been easier. At the end of the day, you can become part owners of individual properties through fractional investing or invest in funds that can provide passive income for many years to come.
Crypto – The Digital Frontier
Another asset that younger investors are bullish on is cryptocurrencies. Since the first Bitcoin was minted in 2008, the crypto market has grown exponentially, making anyone who bought thousands of the early digital coins very wealthy a few years later. Today, it still offers impressive returns, especially after wider adoption. Crypto is becoming more widely adopted worldwide, offering more stability and higher returns for those who invest in it. Still, crypto markets are highly volatile, so it’s important to educate yourself on the topic before diving in. Luckily, most crypto exchanges offer free courses on what crypto is and why it makes 100x from time to time.
Private Equity — Seizing Opportunities for Rapid Growth
Investing in private equity essentially means buying shares in startups before they go public. These days, they take longer than ever to become tradable, which makes them particularly attractive. Add to that the AI transformation and the fact that hundreds of future billion-dollar companies today have fewer than 10 employees, and it’s easy to see why private equity is extremely popular. However, most private companies are not open to mainstream investors. They tend to rely solely on VC firms, hedge funds, and angel investors.
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This article Gen Z and Millennial Millionaires Don’t Care About Stocks and Bonds — Here’s What They’re Buying Instead originally appeared on Benzinga.com
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