A new survey reveals a widening chasm between younger and older investors over a fundamental question: Can you achieve wealth through stocks and bonds alone? This divide highlights a broader shift in investment strategies, particularly among younger generations, who are increasingly looking beyond traditional assets.
The survey asked a pointed question: Is it still possible to achieve above-average investment returns by relying solely on traditional stocks and bonds? A significant 72% of older investors affirmed this belief, underscoring their confidence in time-tested financial instruments. In stark contrast, an equal share of younger investors disagreed, signaling their skepticism toward conventional methods. A striking 93% of these younger respondents indicated a strong inclination to allocate more funds to alternative investments in the near future, compared to just 28% of their older counterparts.
Dustin Wolk, a wealth adviser at Crescent Grove Advisors in Milwaukee, encapsulated the sentiment driving this generational shift: “The survey is asking, ‘Where can I get above-average returns?’ These individuals are answering, ‘I don’t think it’s in stocks and bonds anymore.'”
This divergence extends beyond asset preference to risk perception. Millennials, born between 1981 and 1996, have grown up in an era marked by significant financial turmoil, including the dot-com bubble and the Great Recession. Mike Sullivant, head of investor relations at Aspen Funds in Kansas City, Kansas, noted, “I think the great financial crisis, particularly for this generation, was really formational.”
The younger generation’s approach to risk is particularly evident in their attitudes toward cryptocurrency and other alternative investments. In contrast to older investors, many younger individuals now view these assets as less risky, if not safe. “Among millennials, everybody knows someone who’s become a crypto millionaire,” remarked Craig J. Ferrantino, president of Craig James Financial Services in Melville, New York. This anecdotal evidence reflects a broader trend where digital assets have gained substantial traction among younger investors.
However, financial advisers continue to urge caution. “I would tell someone who is investing in these investments that they are not safe investments,” warned Monica Dwyer, a certified financial planner in West Chester, Ohio. Despite their growing popularity, crypto and other alternatives carry inherent risks that should not be underestimated.
The survey also highlighted differences in how the generations access investment information. Younger investors are increasingly turning to social media, podcasts, and online videos for financial advice, while older investors prefer traditional sources such as newspapers, television, and online articles. The rise of alternative investment pitches on platforms like YouTube and various podcasts has undoubtedly influenced the investment decisions of millennials and Gen Z.
Sullivant pointed out that technological advancements have made alternative investments more accessible to a wider audience. “Now, there are avenues out there and there are voices out there saying, ‘Here’s exactly how you can do this,'” he said. For instance, private equity funds, which were once the exclusive domain of multimillionaires, are now available with buy-ins as low as $25,000.
According to the Bank of America survey, the top five investment choices for Gen Z and millennial investors include real estate (31%), cryptocurrency and digital assets (28%), private equity (26%), personal company or brand investments (24%), and direct investments into companies (22%). This selection reflects a broader trend among younger investors to seek opportunities that align with their values and offer potential for high returns beyond the conventional stock market.
Cryptocurrency, in particular, has become a focal point for many younger investors. Unlike older generations, who may find digital currencies perplexing, millennials have embraced crypto as a natural extension of their digital lives. Peter Lazaroff, a certified financial planner in St. Louis, observed, “When you look at who gravitated toward crypto, initially, it was a younger group. It was difficult even to understand how to buy it.”
With federal regulators now allowing ordinary investors to trade bitcoin ETFs, the doors have opened wider for mainstream participation in the world of digital assets. As alternative investments continue to gain momentum, the debate over whether traditional stocks and bonds can still pave the way to wealth is likely to intensify, reflecting broader shifts in the financial landscape.
