Investing in your 20s and 30s looks a lot different than it did in previous generations. Gone are the days of relying solely on traditional stocks and bonds to grow your wealth. Today, young, wealthy investors are diversifying their portfolios with alternative assets like hedge funds, private equity, and crypto and digital assets.
According to new research from Bank of America, nearly one-third of young investors’ portfolios are in alternative assets, while less than half are in traditional stocks and bonds. This shift in investment strategy is driven by a desire for growth and a different outlook on what constitutes a smart investment.
Young investors see opportunities for growth in areas like real estate investments, crypto/digital assets, and private equity. This contrasts with older investors, who have the majority of their portfolios allocated to stocks and bonds. The younger generation’s appetite for alternatives is unlikely to wane, with 93% indicating they plan to use more of these investments in the future.
So why are younger investors moving away from traditional investments? One reason is that they have grown up with greater access to a broader set of asset classes. They may also have less trust in stocks and bonds due to past financial crises. As a result, they are looking to spread their risk by diversifying their assets.
While having more cash on hand may mean missing out on potential market returns, it can be a strategic choice for younger investors with illiquid alternative investments or big purchases on the horizon. It’s essential to consider the costs involved in alternative investments, such as lock-up periods, fee structures, and expense ratios.
At Extreme Investor Network, we understand the changing landscape of personal finance and offer tailored advice for young, wealthy investors looking to grow and protect their wealth. Our team of experts can help you navigate the world of alternative investments and create a diversified portfolio that aligns with your financial goals. Visit our website to learn more and take control of your financial future today.