Millennials have grown up during a time of volatility in the stock market leading to a general mistrust among the wealthier of the generation.
- Fewer millennials are investing in the stock market than their predecessors. Despite low interest in stocks, millennials are still finding financial success.
- A new study from Bank of America has found that millennials will likely make far different investment decisions than their parents.
- In part, millennials place a greater value on philanthropy and conscientious investments, but one of the greatest shifts is millennials’ distrust of the stock market.
Why it’s news
The majority of wealth lies with the Baby Boomer generation, but as this generation ages out, more millennials are set to inherit their investments in a historic transfer of wealth.
The stock market has been the most consistent perpetuating factor in wealth for generations, so this would be a big change for society.
Yet as the stock market continues to struggle amid rising interest rates and inflation, it seems more likely that millennials’ distrust of the stock market that made their parents rich will continue to grow.
Of those surveyed, millennials tend to prefer alternative investments rather than traditional stocks and bonds. Around 73% of young people surveyed think they are not likely to receive above-average returns on stock investments. Only 32% of older investors surveyed feel the same.
Only a quarter of millennials’ portfolios are in stocks, but older investors have portfolios comprised of 55% stocks.
Millennials are looking to alternative investment opportunities, primarily cryptocurrencies, real estate, and private equity and investments.
Nearly 30% of millennials surveyed viewed crypto as a potential investment to build wealth. Older investors disagreed with only 7% viewing crypto investments favorably.
More than half of young people surveyed said they learn about crypto investments from social media.
Younger investors were also more likely to invest in ESG investments, or sustainable investments. Over 70% of young people surveyed said that they hold ESG investments in their portfolios while only 21% of older investors said the same.
How millennials choose to invest could have a significant effect on the stock market in the coming years as the younger generation is set to inherit $30 trillion in the next 25 years.