Bank of America Private Bank recently conducted a biennial survey of wealthy Americans, uncovering a noticeable generational gap in the way younger and older investors approach asset investment and growth opportunities.
Younger Investors Focus on Alternatives
According to the survey, the younger cohort (ages 21 to 43) invest less in traditional stocks and bonds compared to the older cohort (44 and older). Instead, they show a greater interest in alternative assets, with 93% planning to increase their allocation to alternatives in the near future. Additionally, cryptocurrencies and physical gold are popular among younger investors, with 49% owning cryptocurrencies and the same percentage showing interest in physical gold.
Shift in Investment Outlook
The survey revealed that over 70% of younger wealthy investors no longer believe in achieving above-average returns through traditional investments like stocks and bonds, in contrast to only 28% of older investors. This change in perception is attributed to the volatility the younger generation has witnessed in the market, leading them to seek out alternative investment opportunities.
Long-term Focus on Alternatives
Michael Pelzar, Head of Investments at Bank of America Private Bank, noted that the younger generation's inclination towards alternative investments reflects a long-term perspective. Despite the lower liquidity of some alternative asset classes, the younger cohort sees growth potential in these investments and is willing to allocate more towards them in the coming years.
Implications for the Investment Landscape
Pelzar emphasized the importance of understanding the differences in investment strategies between younger and older investors, suggesting that these insights could shape the future investment landscape. As the market continues to evolve, it is essential for investors to adapt to changing trends and consider a diversified approach to asset allocation.
In summary, the survey highlights the evolving mindset of wealthy investors, with younger generations demonstrating a preference for alternative assets and a willingness to explore new growth opportunities in the market.