Traditional investments like stocks and bonds have long been the backbone of many portfolios, but younger generations are shifting their focus. A 2024 Bank of America survey found that nearly 75% of investors aged 21–43 believe they can’t achieve above-average returns by sticking to traditional options. Instead, they’re turning to real estate, cryptocurrencies, and private equity for growth opportunities.
Why the Shift? The survey revealed the following preferred investments among younger investors:
- Real Estate: 31%
- Cryptocurrencies/Digital Assets: 28%
- Private Equity: 26%
- Stocks: 14%
- Bonds: 17%
This shift signals a growing interest in alternative assets that offer both growth potential and diversification. However, these investments come with their own set of challenges and risks.
Pros and Cons of Alternative Investments
Real Estate: Real estate provides tangible value and control. Investors can increase property values through improvements, enjoy steady rental income, and benefit from tax advantages like depreciation and mortgage interest deductions. However, real estate requires substantial time, financial resources, and often comes with liquidity challenges during economic downturns.
Cryptocurrencies/Digital Assets: Younger investors are drawn to crypto for its decentralized nature and potential for massive returns. However, cryptocurrencies are volatile, unregulated, and prone to hacks and scams. Additionally, the uncertain regulatory environment makes them a risky choice for long-term investments.
Private Equity: Private equity offers access to high-growth opportunities, such as start-ups or companies undergoing strategic transformations. The potential returns can be significant, but these investments often come with high entry barriers, long holding periods, and substantial risk if the business fails.
Key Takeaway While alternative assets can offer diversification and growth opportunities, careful planning is essential. Evaluate the risks, time commitment, and tax implications before committing to any investment.
At Reynolds + Rowella, we can help you craft a strategy tailored to your financial goals. Connect with us today to explore your options and make informed decisions.
Reynolds + Rowella is a regional accounting and consulting firm known for a team approach to financial problem solving. As Certified Public Accountants, our partners foster a personal touch with our clients. As members of DFK International/USA, an association of accountants and advisors, our professional network is international, yet many of our clients have known us for years through the local communities we serve. Our mission is to operate as a financial services firm of outstanding quality. Our efforts are directed at serving our clients in the most efficient and responsive manner possible, delivering services that exceed the expectations of those we serve. The firm has offices at 90 Grove St., Ridgefield, Conn., and 51 Locust Ave., New Canaan, Conn. For more information, please contact Elizabeth Bresnan at 203.438.0161 or email.
