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Gen Z Investors Shun 60-40 Portfolio for Sneakers and Rare Cars, BofA Says

Nearly three-quarters of wealthy younger Americans say stocks and bonds alone can’t deliver above-average returns.

(Bloomberg) -- The new rich are trading long-standing investing tactics for more crypto-heavy portfolios and a passion for collectibles.

Roughly 94% of Gen Z and Millennial investors are interested in collecting items such as watches, rare cars and sneakers, according to a new survey of wealthy Americans by Bank of America Corp. It was the highest rate for any generation surveyed, with only 57% of Baby Boomers expressing interest in collectibles.

The results illustrate the deepening generational gap between Gen Z and Millennial investors and their Baby Boomer counterparts, according to the survey. With nearly three-quarters of wealthy younger Americans saying stocks and bonds alone can’t deliver above-average returns, the future of wealth is increasingly running through more alternative investments.

“Millennials and Gen Z tend to be interested in alternative assets,” Drew Watson, head of art services at Bank of America Private Bank, said.

When identifying which sectors promise the greatest future gains, younger Americans gravitated toward newer means of growing wealth. While real estate remained a top bet for both younger and older investors, the younger cohort — from ages 21 to 43 —  ranked cryptocurrency and digital assets, as well as investing in a personal company or brand, higher than the older generation as bets with the greatest opportunity for growth.

Younger wealthy investors hold roughly the same allocation of stocks, bonds, alts and crypto, regardless of whether they self-identify their investment strategy as aggressive, moderate, or conservative.

“The portfolio choices of younger people do suggest a perspective shift between the generations,” Bank of America said in the report. “Just as young and old rank investment opportunities differently, their views on risk may differ as well.”

Wealthy younger Americans cited social media as their primary source for financial news, education and advice — a seismic shift from older generations who favored more traditional news outlets. 

“Half of younger people prefer to get their financial content from social media, which could be promoting untested advice as easily as it sources researched and verified guidance,” according to the report. Bank of America surveyed more than 1,000 respondents who had at least $3 million in investable assets.

Even as their faith in traditional financial strategies wanes, more than half of wealthy younger Americans surveyed said the US economy is “very good” or “excellent,” roughly twice the rate of older Americans.

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