Ultra-Rich Young Americans Are Investing In Stocks Half As Much As Older People With Similar Wealth, Survey Finds

Topline

Younger rich Americans are far more likely to shun traditional investments in favor of ones they view as more likely to bring higher returns than their older peers, according to a Bank of America survey released Tuesday.

Key Facts

About three quarters of the millionaire respondents ages 21 to 42 said it’s impossible to achieve above-average returns solely investing in stocks and bonds, compared to 32% of older respondents.

Millennial and Gen-Z millionaires are showing that conviction in their investments, allocating just 25% of their portfolios to stocks and index funds compared to a 55% allocation for older respondents.

The younger cohort instead largely turns to cryptocurrency, with the average portfolio of younger millionaires allocating 15% of their portfolios to digital assets, far more than the 2% average allocation for those over 42 years old.

The bank surveyed 1,052 Americans with $3 million in household investable assets, and a majority of younger respondents accumulated their fortunes via inheritance.

Younger millionaires were also far more likely to focus on socially responsible investments: 90% of respondents ages 42 and below said they considered company policies before investing, compared to 44% of older respondents.

Key Background

Stocks and cryptocurrencies have each cratered in 2022, though the market’s dip has been far less severe. Bitcoin is down 60% year-to-date to about $19,000, while the S&P 500 is down 25%. Both stocks and cryptocurrencies exploded in value during the first 18 months of the pandemic and are still up big over the last two and a half years, with the S&P providing a 55% return from its March 2020 low, compared to a 210% return for bitcoin.

Big Number

16%. That’s the share of Americans who have invested in or used a cryptocurrency, according to a Pew Research Center survey last fall. About 30% of respondents ages 18 to 29 invested in or used a cryptocurrency, compared to 21% of those ages 30 to 49, 8% of those ages 50 to 64 and 3% of those ages 65 and older.

Further Reading

Rich Millennials Have Lost Confidence in Stock Market, BofA Says (Bloomberg)

Crypto’s Super User: Young Men. 43% Of U.S. Males Aged 18 To 29 Have Bought The Currency (Forbes)