Feb 16, 2024
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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 — with a preference for alternative investments outside the shaky stock market — enters the scene.
According to a recent 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 — compared to 55% for wealthy investors over age 43.
So what assets do rich millennials favor?
Diversify with fine art
Millennials are not only collecting art – they’re also among the asset’s top investors.
According to a 2021 report from Art Basel, rich millennials were the highest spenders on fine art, with 30% of millennial collectors having spent over $1 million.
Fine art is the perfect alternative investment for savvy and high net worth investors who are looking to diversify their portfolio. It’s notably consistent, as contemporary art has outperformed the S&P 500 by 131% for the past 26 years.
Previously, there was no way to invest unless you had millions to buy an entire painting. But Masterworks has completely changed that. Instead of buying a single painting for millions of dollars, you can now invest in shares of individual works.
With this revolutionary investment platform, all you have to do is select which shares you want to buy and Masterworks will handle the rest.
Hedge against inflation with real estate
Prime commercial real estate has outperformed the S&P 500 over a 25-year period. It’s no surprise that high-net-worth individuals — regardless of their age — see opportunity in this asset.
Luckily these kinds of opportunities are now available to retail investors. Not just the ultra rich.
First National Realty Partners lets accredited investors own a share of institutional-quality properties leased by national brands like Whole Foods, CVS, Kroger and Walmart. You can expect to collect stable grocery store-anchored income every quarter.
FNRP’s team of experts vets every deal against a rigorous set of investment criteria and manages them in-house, so you don’t have to worry.
Get in on private markets
Wealthy millennials have discovered investment opportunities that were once the exclusive domain of hedge funds. According to Bank of America, young investors allocate three times more space in their portfolios to alternative investments – such as private equity and real estate – than their older counterparts.
If you want to follow this allocation strategy, Fundrise grants access to a diverse world of alternative investments, including real estate, private debt and even venture capital.
With over 2 million people investing on the platform and $7 billion worth of real estate assets alone, Fundrise uses its unique software-enabled systems to lower overhead and potentially deliver superior returns.
When you answer some questions about yourself, your finances and investing style, Fundrise will recommend an investment plan tailored to your needs.
Consult a professional
One thing that all generations of high-earners seem to share is a reliance on – and trust in – financial advisors. According to the Bank of America survey, more than 90% of wealthy Americans use either a human or robo-advisor.
Perhaps surprisingly, millennials showed the strongest preference for in-person communication with their advisors. This makes sense, given that research shows that those who use a financial advisor retire with an extra $1.3 million.
If you’re going to be relying on someone to help you grow your wealth, it’s important that you build a strong relationship – one that stands the test of time.
Zoe Financial can help you narrow your search for a trustworthy advisor.
Their free matching service connects you with a range of highly-vetted financial professionals who can help you maximize your earnings potential and ensure you minimize unnecessary fees or tax burdens.
Once you find a match you like, you can schedule a free consultation to ensure this is someone accompanying you on your financial journey.
The Moneywise Editorial Team is a group of passionate financial experts, seasoned journalists, and content creators who are deeply committed to providing unbiased, relevant, and accurate financial information. With years of combined industry experience, our team is dedicated to maintaining the highest journalistic standards and delivering informative and engaging content. From personal finance and investing to retirement planning and business finance, we cover a broad range of topics to suit the financial needs of our diverse readership. You can trust the Moneywise Editorial Team to empower you with the knowledge and tools necessary to make wise financial decisions.
