In Bank of America Private Bank’s recent survey of wealthy Americans, a notable generational divide emerged in the perception of the best opportunities for asset investment and growth. The survey, conducted by market research company Escalent and encompassing 1,007 high-net-worth individuals with at least $3 million in investable assets, revealed intriguing insights into the mindset of younger versus older investors.
One of the key findings was that the younger cohort (ages 21 to 43) displayed a more diversified investment approach compared to their older counterparts. While 47% of the younger investors’ portfolios were allocated to stocks and bonds, a significantly lower percentage than the older cohort’s 74%, they displayed a greater interest in alternative assets. In fact, nearly all of the younger investors (93%) expressed their intention to increase their allocation to alternative investments in the coming years.
Cryptocurrencies emerged as a popular choice among younger investors, with 49% already owning them and an additional 38% expressing interest. Interestingly, younger investors ranked crypto as the top opportunity after real estate, indicating a growing appeal for this digital asset class. Moreover, physical gold also garnered attention, with 45% of the younger cohort already holding it as an asset and another 45% showing interest in owning it.
The disparities in investment allocations and perceived opportunities between the two age groups were driven by differences in financial outlooks. Notably, the survey revealed that over 70% of younger investors no longer believed it was possible to achieve above-average returns by solely investing in stocks and bonds, in stark contrast to only 28% of older investors who shared this view.
This skepticism among younger investors towards traditional investments can be attributed to the market volatility and economic turbulence they have experienced in recent years. With two market crashes in their investing lifetime and an observed increasing correlation between stocks and bonds, younger investors have been prompted to rethink their asset allocation strategies to achieve their desired returns.
As the stock market continues its upward trajectory in 2024, younger investors are turning towards alternative assets for growth opportunities. According to Michael Pelzar, head of investments at Bank of America Private Bank, this shift in focus is indicative of the younger cohort’s longer-term perspective and their belief in the potential of alternative asset classes.
In conclusion, the survey results highlight the evolving investment landscape and the importance of understanding the unique perspectives of different investor demographics. With valuable insights gained from this study, investors can make more informed decisions and tailor their investment strategies to align with their financial goals and risk tolerance.
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