On October 11, 2022, Bank of America released a study showing that young Americans are moving away from traditional investments.
A new finding by the financial information website Safetradebinaryoptions analyzes why young Americans prefer riskier assets over safe ones.
The author at Safetradebinaryoptions, Saqib Iqbal, commented on the findings:
“The lack of confidence in stocks suggests that younger generations increasingly believe that a standard portfolio of stocks and bonds will not generate above-average returns over time. The stock market has had a really good run over the previous decade. However, 2022 has been wild for the markets. That’s what many young people are thinking.”
Investable assets by population, Source: BoA
According to a Bank of America poll of 1,052 persons with investable assets of more than $3 million, younger people are not choosing to invest in traditional assets.
Those aged 21–42 with more than $3 million in investible assets regarded cryptocurrencies and digital assets as the best option for developing long-term wealth.
Digital currencies and online images were named as the top investment opportunities by 29% of respondents, compared to 12% for US equities and 15% for overseas or emerging market stocks.
Almost two-thirds, or 64%, indicated they knew about cryptocurrency.
53% indicated they get crypto investing advice from social media.
Many experts say that young people should have more exposure to the stock market due to their longer investing window.
This is a historically successful strategy. The benchmark S&P 500 generated an annualized average return of over 12% from its establishment in 1957 until the end of 2021.
So, why are millennials moving away from traditional assets?
Even though crypto markets have plunged this year, millennials are not letting it go.
Crypto fans have coined the term crypto winter to describe this year’s collapse, a creative phrase that indicates that a crypto spring and summer will follow.
Many see huge potential in cryptocurrency, and that’s why they are betting on them.
However, considering the crypto dip this year, none of the crypto claims has held any water.
Claims that they are safe havens from economic and political instability and provide a hedge against inflation haven’t worked this year.
However, one can’t completely deny their argument, as stocks are in red this year.
All summer, we have been hearing that the stock market may have bottomed out.
There is a lot of uncertainty around rising inflation, high-interest rates, and the possibility of a recession.
So, there is a substantial lack of interest in stocks among younger rich investors. Maybe stock market bearishness isn’t at its peak, but it’s very high.