California; Hayward — A new surge of investors is diverging from the conventional stocks and bonds path, opting instead for the exploration of alternative assets. Both Gen Z and affluent young investors are progressively gravitating towards unconventional investments as opposed to the customary options.
As indicated by a survey conducted by Lansons, the engagement in alternative assets among the entire American population is below 10%. Nevertheless, among the younger cohorts, there exists a heightened interest in alternative investments, with 30% of Gen Z and 25% of millennials either already invested in such assets or possessing awareness of platforms that facilitate such investments, according to Yahoo Finance.
Bank of America's study further discloses that 75% of Americans aged between 21 and 42 question the potential of achieving above-average returns solely from traditional stocks and bonds. Over the period from May to June 2022, the firm surveyed a total of 1,052 high-net-worth investors, each holding at least $3 million in investable assets.
But what precisely are these alternative investments that have captured the attention of young investors, and what is the allure pulling them towards these unorthodox choices? Alternative investments encompass a diverse array of assets beyond the customary stocks, bonds, and cash. These encompass real estate, private equity, cryptocurrencies, and commodities like gold and oil. While these investments might offer less liquidity and be perceived as riskier, they also carry the potential for higher returns.
Josh Passman, the CEO of Lansons New York, underscores that alternative assets such as wine, gold, and real estate are generally considered robust safeguards against inflation.
Within these alternatives, fine wine and spirits have established themselves as credible investments, potentially appreciating in value over time. One distinct advantage of putting resources into fine wine and spirits is their capacity to offer not just financial potential but also a pleasurable element for the investor, rendering it a more enjoyable and gratifying investment compared to conventional assets.
Vint is simplifying the path for young investors venturing into fine wine investments. By leveraging market data and trends, Vint tailors unique and diversified collections. Their standout feature is an exceedingly low minimum investment threshold of just $25, enabling even those with limited funds to partake in this enthralling market. To ensure investors are well-informed, Vint provides valuable educational resources and tools, empowering them to grasp the subtleties of the fine wine market and make well-informed investment decisions.
A significant catalyst for the burgeoning interest in alternative investments among the younger cohort is the aspiration for diversification. Given the heightened volatility in the stock market and the potential for substantial losses, spreading risks across various asset classes becomes an appealing strategy.
An essential driving force behind this trend is the emergence of user-friendly online platforms that have democratized the accessibility of alternative assets for young investors. Unlike the past, when these opportunities were predominantly reserved for the affluent or well-connected, the surge of online brokers and robo-advisors has made the investment landscape more inclusive. Now, practically anyone with an internet connection can explore and potentially invest in alternative assets.
Another enticing facet for young investors is the potential for a more tailored and interactive experience in managing their investments. Certain alternative investments, such as real estate and private equity, grant investors a hands-on approach, affording them greater control over their financial strategies.
Beyond financial motivations, societal and cultural factors also contribute to the appeal of alternative investments among young individuals. For numerous people, investing isn't solely about growing their wealth; it's also a prospect to effect positive change in society. Hence, alternative investments like impact investing and socially responsible investing enable young investors to align their financial decisions with their principles, striving to foster positive change while pursuing their financial objectives.
Noumaan Faiz, (he/him) is a journalist and entertainer from Hayward, CA who covers culture and entertainment.
Edited by Nykeya Woods