Rich millennial Americans have lost confidence in the stock market — and are betting on these 3 assets instead for long-term tailwinds
The stock market has long been the go-to choice for people looking to invest their money. But that could be about to change as a younger generation enters the scene.
According to a survey from Bank of America, individuals aged 21 to 42 with at least $3 million in assets only have 25% of their portfolio invested in stocks. For wealthy investors over age 43, the allocation to equities is much higher at 55%.
The recent market volatility may have something to do with these millennials’ decisions.
“We’ve had a very strong run in the stock market over the last decade and are now living through volatile times. That’s on the front of people’s minds,” says Jeff Busconi, chief operating officer at Bank of America Private Bank, in an interview.
Despite the stock market’s recent bounce, the benchmark S&P 500 Index is still down around 9% over the last year.
Busconi adds that the younger generation of investors increasingly believes that “a traditional portfolio of stock and bonds is not going to deliver above-average returns over time.”
So which assets do rich millennials favor?
Real estate has been a popular asset class as of late — perhaps because it’s a well-known hedge against inflation.
As the price of raw materials and labor goes up, new properties are more expensive to build. And that drives up the price of existing real estate.
Well-chosen properties can provide more than just price appreciation. Investors also get to earn a steady stream of rental income.
It’s no surprise that high net worth individuals — regardless of their age — sees opportunity in this asset.
In the Bank of America survey, 28% of younger people said real estate presents great growth potential. And 31% of the older group held the same opinion.
But you don’t need to be a landlord to start investing in real estate. There are plenty of real estate investment trusts (REITs) as well as crowdfunding platforms that…