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Wealthy young Americans have lost faith in the stock market – and are betting on these three assets instead. Join now for long-term strong winds


Wealthy young Americans have lost faith in the stock market - and are betting on these three assets instead.  Join now for long-term strong winds

Wealthy young Americans have lost faith in the stock market – and are betting on these three assets instead. Join now for long-term strong winds

The stock market has long been the first choice for people who want to invest their money. But that could be about to change as a younger generation steps into the situation.

According to a recent Bank of America survey, individuals between the ages of 21 and 42 with assets of at least $3 million have only 25% of their portfolios in stocks. For wealthy investors over the age of 43, the allocation to stocks is much higher at 55%.

This year’s bear market could influence the decisions of millennials.

“We have had a very strong run in the stock market over the past decade and are going through a tumultuous period right now. Jeff Busconi, CEO at Bank of America Private Bank, said in an interview.

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Despite the recent stock market rally, the benchmark S&P 500 is still down nearly 20% year-over-year.

Busconi adds that a younger generation of investors increasingly believe that “traditional stock and bond portfolios will not deliver above-average returns over time.”

So what assets are favored by the rich generation?

Electronic money

Once considered a niche asset, cryptocurrencies have now become mainstream. A study from the CFA Institute earlier this year found that 94% of government and state pension plans invested in crypto.

Of course, many investors learned about crypto volatility the hard way through this year’s big drop. But some wealthy millennials still believe in the asset class.

In the Bank of America survey, 29% of young people said cryptocurrencies offer great growth opportunities, while only 7% of the older group agreed.

Unsurprisingly, young people are also more exposed to cryptocurrencies (average allocation 15% of their portfolio) than older generations (average allocation 2% of their portfolio). surname).

It’s easy to do – there are many platforms that allow you to invest in cryptocurrencies. Just be aware of fees: many exchanges charge a commission of up to 4% just to buy and sell cryptocurrencies. But some investment apps 0% fee.

Real Estate

Real estate has been a popular asset class since late this year – perhaps because it is a well-known hedge against inflation.

As the cost of materials and labor increases, new properties will be more expensive to build. And that increases existing property prices.

Well-chosen assets can offer more than just price appreciation. Investors can also earn a steady stream of rental income.

Read more: ‘Stay away from ‘Financial La La Land’: Suze Orman says most Americans need to do this now to survive their next crisis

It’s no surprise that high net worth individuals – regardless of their age – see opportunity in this asset.

In the Bank of America survey, 28% of young people said real estate has great growth potential. 31% of the older group share the same opinion.

But you don’t have to be a homeowner to start investing in real estate. There are many real estate investment trusts (REITs) as well crowdfunding platform that can get you started as a real estate tycoon.

Private equity

Private equity refers to investments in companies that are not publicly traded on a stock exchange.

Private equity funds receive money from the fund’s investors, invest the money in companies – often by taking a controlling stake – and work with the companies’ management teams to make their businesses they are more valuable. The aim is to sell the companies in their portfolio later – hopefully for a decent profit.

While private equity funds are not usually open to small investors, they have become popular among the wealthy.

In 2021, private equity purchases doubled from 2020 to $1.1 trillion according to Bain & Company.

It is also of interest to millennials with a high net worth.

The Bank of America survey suggests that 25% of 21- to 42-year-old individuals with assets of at least $3 million identify private capital as one of the biggest growth opportunities, compared with 15% in older people.

What to read next?

This article is for information only and should not be construed as advice. It is provided without warranty of any kind.

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