In a poll among American investors aged between 21 and 42 (Millennial), two-thirds believe that achieving above-average returns is impossible if their income source was based solely on traditional stocks and bonds.
Millennial and Generation X investors feel that cryptocurrency can serve as an effective means for them to have much better income.
Bank of America polled 1052 high net-worth investors that fell under the age group mentioned above. The list consisted of those with at least $3 million in their investable assets from May to June 2022.
Among these, around 80 percent chose to opt for the 'alternative' investment options that don't come under the traditional asset classes. Compared to the other generations, these young investors invest thrice as much in alternative assets and half as much in stocks.
Past research also indicates that younger generations are more inclined toward digital assets than older investors. Amidst the boom phase of the bull run in 2021, several youngsters said they would gladly receive their payments and salaries in crypto instead of fiat.
We can broadly classify alternative investments into four categories: hedge funds, private equity, 'real assets like real estate or commodities, and prepackaged investments called 'structured products.
According to a recent survey report published by Cerulli Associates, amidst double-digit losses accrued in the stock and bond market, the planners are looking for further diversification in the forms of assets and are rapidly turning to alternative investments.
In its report, the Bank of America stated that approximately 75 percent of the investors aged or below 42 believe that the exposure of just traditional stocks and bonds will no longer suffice to guarantee future gains. They are thinking of including alternative financial instruments like crypto, real estate, private equity, etc., as a part of their portfolios.
As compared to the younger generation, only 32 percent of those who are above the age of 42 prefer to depend on these alternative investment options and have invested just 5% of their money in these sectors.
The report further mentioned that 68% of the parents who participated in the polls had already had conversations with their kids about their family wealth and how much of it the next generation would inherit.
Study indicates that the shift in control and influence over the largest share of the US personal wealth, $84 trillion, would be from the baby boomers to Gen X and the Millennials by 2045.
A CNBC research from 2021 indicated that approximately 47% of Millennial millionaires invested at least one-fourth of their funds in digital assets. On the contrary, 83% of the big investors from the older generation did not have a positive attitude towards crypto and have not considered investing in it.
As per the studies and research, older generations are reluctant to interact with alternative investments like cryptocurrencies when advising their children.
However, the trends indicate that when Millennials and Generation X would teach their children about money planning in the future, the lessons could differ significantly as many of them are enthusiastic about dealing with crypto assets and other alternative investments.