A fresh wave of investors is veering away from the tried-and-true stocks and bonds, opting to venture into alternative assets. Gen Z and wealthy young investors are increasingly drawn to alternative investments rather than conventional choices.
Based on a survey conducted by Lansons, it was found that less than 10% of the entire American population has invested in alternative assets. However, among the younger generations, there is a more significant interest in alternative investments, with 30% of Gen Z and 25% of millennials either investing in such assets or possessing knowledge of platforms that facilitate these investments.
A study by Bank of America further reveals that 75% of Americans aged between 21 and 42 doubt the possibility of achieving above-average returns solely through traditional stocks and bonds. From May to June 2022, a total of 1,052 high-net-worth investors, each possessing at least $3 million in investable assets, were surveyed by the firm.
But what exactly are these alternative investments that have caught the attention of young investors, and what draws them to these unconventional choices? Alternative investments encompass a diverse range of assets beyond the typical stocks, bonds, and cash. Examples include real estate, private equity, cryptocurrencies, and commodities like gold and oil. Although these investments may be less liquid and perceived as riskier, they also offer the potential for higher returns.
Josh Passman, the CEO of Lansons New York, emphasized that alternative assets, including wine, gold, and real estate, are generally considered strong hedges against inflation.
Among these alternatives, fine wine and spirits have a reputation as a sound investment, with the potential to appreciate in value over time. One notable advantage of investing in fine wine and spirits is that they offer not only financial potential but also an element of enjoyment for the investor, making it a more pleasurable and fulfilling investment compared to traditional assets.
Vint is a company simplifying the path for young investors to venture into fine wine investments. By leveraging market data and trends, Vint curates distinct and diversified collections. What sets them apart is their remarkably low minimum investment requirement of just $25, enabling even those with modest funds to participate in this exciting market. To ensure investors are well-equipped, Vint offers valuable educational resources and tools, empowering them to understand the nuances of the fine wine market and make informed investment choices.
One primary reason for the growing interest in alternative investments among younger investors is the desire for diversification. Given the increased volatility in the stock market and the potential for substantial losses, spreading risks across different asset classes becomes an appealing strategy.
A key driver behind this trend is the emergence of user-friendly online platforms that have made it more accessible for young investors to delve into alternative assets. Unlike in the past when these opportunities were mostly reserved for the wealthy or well-connected, the rise of online brokers and robo-advisors has democratized the investment landscape. Now, virtually anyone with an internet connection can explore and potentially invest in alternative assets.
Another attractive aspect for younger investors is the potential for a more personalized and interactive experience in managing their investments. Certain alternative investments, such as real estate and private equity, enable investors to take a hands-on approach, granting them greater control over their financial strategies.
Beyond economic motivations, social and cultural factors also play a role in the appeal of alternative investments among young individuals. For many, investing isn’t solely about growing their wealth; it’s also an opportunity to make a positive impact on society. Thus, alternative investments like impact investing and socially responsible investing allow young investors to align their financial choices with their values, aiming to create positive change while pursuing their financial goals.