Gen Z is ditching traditional investments for classic cars, sneakers and wine
Gen Z, millennials investing more in collectibles and crypto
Is Gen Z off to a good start investing for retirement?
'Barron's Roundtable' discusses reports that Gen Z members are aggressive about wanting to retire.
For years, many Americans have believed that investing in traditional stocks and bonds is the best way to build wealth.
But there is a growing generational divide among wealthy millennials and Gen Zers, who are ditching long-standing investing practices for collectibles and crypto-heavy portfolios.
Just 14% of Gen Z and millennial investors believe that stocks are the best opportunities for growth, compared to 41% of investors over the age of 44, according to a new survey of wealthy Americans published by Bank of America.
In fact, an overwhelming majority of younger investors — about 72% — believe it is no longer possible to achieve above average investment returns by solely investing in stocks and bonds — a stark contrast to the 28% of investors over the age of 44 who hold that same view. Just 47% of the younger investors' portfolios are in stocks and bonds, while older investors have about 74% invested in those more traditional assets.
MORE RETIREES CONSIDER RETURNING TO WORK AS HIGH INFLATION SQUEEZES
David Gooding, president and founder of Gooding and Co., left, and Auctioneer Charlie Ross appear during the Gooding and Company auction at the 2023 Pebble Beach Concours d'Elegance in Pebble Beach, California, on Aug. 19, 2023. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
Instead, these younger high-net-worth individuals are pouring money into alternative investments.
The survey found that about 94% of Gen Z and millennial investors are collecting items like watches, classic cars, wine, sneakers and antiques, while just 57% of baby boomers are interested in those same collectibles.
INFLATION IS UP 20% SINCE BIDEN TOOK OFFICE
"The portfolio choices of younger people do suggest a perspective shift between the generations," the report said. "Just as young and old rank investment opportunities differently, their views on risk may differ as well."
Secondhand Rolex luxury watches are displayed at Seregins Fine Timepieces in San Francisco on Aug. 4, 2023. (Justin Sullivan/Getty Images / Getty Images)
About 31% of younger investors see real estate as the best investment opportunity, while crypto and other digital assets came in a close second with 28%. By comparison, just 4% of older investors thought that crypto was a good investment opportunity.
Age is the "dominant factor" when it comes to interest in crypto. Although overall usage is low, young people are 7.5 times more likely to hold crypto in their portfolios and five times more likely to say they understand it quite well, the survey shows. One reason could be that more than half of younger Americans said their advice source for crypto is social media, while older investors were more likely to say they got advice from doing online research.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
"We’re living through a period of great social, economic and technological change alongside the greatest generational transfer of wealth in history," said 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."
Bank of America surveyed more than 1,000 respondents who had at least $3 million in investable assets.