Wealthy, young Americans are ignoring the stormy stock market — these are the alternative assets they’re relying on instead

We adhere to strict standards of editorial integrity to help you make decisions with confidence. Some or all of the links in this article are paid links.

Warren Buffett, Elon Musk and Jeff Bezos are among the richest and smartest Americans who have ever lived. The majority of their wealth is in stocks. But when it comes to investing in the stock market, today’s wealthy young Americans aren’t following in their footsteps.

The stock market has long been the go-to choice for people looking to invest their money. But that could change as a younger generation — with a preference for alternative investments outside of the faltering stock market — enters the scene.

According to a recent survey by Bank of America, individuals between the ages of 21 and 43 with at least $3 million in assets have only 25% of their portfolio invested in stocks, compared to 55% for wealthy investors over 43.

Most wealthy young Americans (93%) say they plan to allocate more of their portfolio to alternatives in the coming years. So which alternative investments are attracting the interest of these young millionaires?

Don’t miss it

• Commercial real estate has been beating the stock market for 25 years — but only the super-rich could get in. This is how even ordinary investors can become landlords for Walmart, Whole Foods or Kroger

• Auto insurance premiums in America are sky high — and only getting worse. But in 5 minutes, you could be paying as little as $29/month

• These 5 Magical Money Moves Will Boost Your Net Worth in 2024 — and You Can Complete Each Step in Minutes. Here’s How

Real estate: rich in opportunities

Real estate has long been considered a solid portfolio hedge, as rents and property values ​​tend to rise with inflation. It’s no surprise that wealthy individuals — regardless of age — see opportunities in this asset.

In the Bank of America survey, 31% of young people said real estate offers the greatest opportunity for growth. Federal Reserve data also shows that the top 1% of Americans own more than $6 trillion in real estate.

But you don’t have to be a Grant Cardone to invest in these assets. You can get started as a real estate investor on various platforms.

Instead of buying a home outright or taking out an expensive mortgage, there is a crowdfunding platform that takes a different approach, allowing you to invest directly in owner-occupied homes.

Cityfunds allows you to take advantage of the strong housing market in major US cities including Miami, Los Angeles and Nashville.

Cityfunds insures an interest in the future value of a home in exchange for cash. As the value of these homes increases, so does the value of Cityfunds equity investments along with the homeowners. So you can invest in portfolios of these owner-occupied properties, tapping into the $20 trillion residential equity market spanning several top U.S. metros.

With a community of over 10,000 users, Cityfunds lets you invest in a city you love from as little as $500, without the hassle of high housing prices, an expensive mortgage or the hassle of being a landlord.

Are you a recognized investor looking to add a larger real estate stake to your portfolio? Then the lucrative opportunities of commercial real estate are also available to you.

First National Realty Partners offers individual investors access to institutional-quality commercial real estate investments. With FNRP, investors own a portion of properties leased by national brands like Whole Foods, CVS, Kroger and Walmart, generating steady, positive cash flow without the worry of tenant fees and management.

FNRP allows ordinary investors to become landlords of these major brands and benefit from the potential for higher returns, diversification and transparency.

Investing in private equity

Private equity refers to investments in companies that are not publicly traded on a stock exchange. This asset class involves investing directly in private companies, often during their growth phase or through buyouts.

It remains a popular choice among young investors looking for higher returns and more control over their investments.

Bank of America research shows that more than 25% of young, wealthy millionaires see private equity as one of the biggest growth opportunities.

While private equity offers significant upside potential, it also requires a longer-term commitment and carries higher risks than public equities.

Private equity is a broad category that encompasses a wide range of assets, so finding a firm that can help you allocate your capital to the right assets can be a way to dip your toe into this lucrative category.

With Fundrise you gain access to a comprehensive portfolio of alternative investment opportunities ranging from real estate, private debt to venture capital.

With over two million investors and over $7 billion in assets under management in real estate alone, Fundrise is an accessible way to diversify your portfolio with the ability to pay dividends every quarter.

To get started, all you need to do is share some details about your financial background and investment style. Fundrise will then create a portfolio for you that matches your goals and risk tolerance.

Read more: Auto insurance rates have risen to a staggering $2,150/year in the US — but you can be smarter than that. Here’s how you can save up to $820 annually in just a few minutes (it’s 100% free)

Cryptocurrency: More Than a Fad

Investors used to be skeptical about cryptocurrency, perhaps because of its speculative and highly volatile nature. But it has now gone mainstream, and the global cryptocurrency market cap currently stands at around $2.34 trillion, according to Forbes.

It’s no surprise that wealthy millennials and Gen Z are crazy about this asset class. In Bank of America’s survey, 29% of young people said cryptos offer the greatest opportunity for growth, while only 7% of the older group agreed.

Wealthy young Americans have also allocated 15% of their portfolios to crypto, compared to 2% by the older generation. It’s easy to get involved.

At eToro you can invest in Bitcoin and almost 100 other cryptocurrencies on a secure platform.

eToro is one of the largest communities of traders and investors in the world, with over 30 million members.

With powerful tools, easy-to-use features, educational resources, and transparent fees, you can start crypto trading with confidence.

Gold for your golden years

Which asset class do millennials and Gen Z investors both want to own? You guessed it, but it’s gold.

Bank of America research shows that 45% of wealthy young investors own gold as a physical asset and another 45% are interested in owning it.

Historically, gold has served as a hedge against inflation and market volatility. Many investors turn to “safe haven” assets like gold during economic and geopolitical instability to preserve their wealth.

Indeed, investor enthusiasm has pushed gold prices to record highs, with the precious metal recently surpassing $2,300 per ounce.

There are many gold assets to choose from, including gold bars, coins, and gold stocks.

But right now, opening a gold IRA may be especially practical as part of your long-term strategy.

By choosing a gold IRA with the help of American Hartford Gold, you have the opportunity to diversify your portfolio, stabilize your finances, and secure your retirement by investing directly in physical precious metals instead of stocks and bonds.

As one of the nation’s most trusted precious metals companies—with an A+ rating from the Better Business Bureau—American Hartford Gold has helped thousands of customers protect their retirement.

When you sign up, you’ll be eligible for up to $10,000 in free silver and a free investor guide to help you diversify your portfolio and secure your retirement fund.

A creative way to diversify

More than 72% of younger investors (21-43 years old) believe that it is no longer possible to achieve above-average investment returns by investing only in traditional stocks and bonds. Art is one of the alternative investments that has caught the attention of savvy investors.

According to Deloitte, art represents a huge asset class, with an annual transaction volume of over $67 billion and a total estimated global value of $1.7 trillion.

In fact, visual arts has historically outperformed the S&P 500. From 1995 to 2023, contemporary art returned 11.5% annually, compared to 9.6% for the S&P 500 over the same period.

In the past, you had to be filthy rich to invest in art. After all, you needed millions to buy a painting at auction.

But Masterworks has now changed that. This investment platform has made it possible for more investors to gain access to this prized asset.

Instead of buying a single painting for millions of dollars, you can now invest in fractional shares of top paintings by famous artists including Pablo Picasso, Basquiat and Banksy.

All you need to do is select how many shares you want to buy and Masterworks will take care of the rest.

What to read next

This article provides information only and should not be taken as advice. It is provided without warranty of any kind.