Millennials May Have Racked Up Trillions In Debt, But Boomers Could Learn From Their Investment Strategies

At the end of 2022, people in their 30s accumulated a record-high debt of over $3.8 trillion. While it may be tempting to overlook millennials’ financial strategies because of their debt levels, baby boomers might discover an approach to investment that has the potential to yield significant benefits. 

One notable financial strategy that stands out is millennials’ growing interest in alternative assets, which encompass a broad spectrum of categories such as real estate, farms, art, wine and franchises. 

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A standout platform in this domain is Vint, which has been gaining significant attention. Vint enables investors to participate in securitized offerings of the world’s most coveted fine wines and rare spirits. Vint’s unique approach to investment sets it apart. Through this platform, investors gain access to a traditionally exclusive market, allowing them to diversify their portfolios in an unconventional yet potentially lucrative manner.

The allure of these alternative investments goes beyond their exclusivity; they hold the promise of reducing portfolio volatility, offering stability and expanding the breadth of investments. This, in turn, contributes to the cultivation of a more risk-averse financial strategy, which aligns with the broader goals of wealth preservation and growth.

Wealthier millennials are diversifying their portfolios through these alternative assets, aiming to safeguard and grow their wealth — especially in the face of rising inflation. Their experiences navigating a financially challenging landscape have made them more open to unconventional financial strategies, which could prove beneficial in future economic recessions.

Despite holding a significantly smaller share of U.S. wealth, accounting for just 5.6% in the first quarter of 2023 compared to the commanding 53% held by boomers, millennials are displaying a preference for allocating a larger proportion of their portfolios to alternative investments. A 2022 Bank of America study highlights this trend, revealing that people ages 21 to 42 have three times the allocation to alternative investments in their portfolios compared to their older counterparts who are 43 and above.

Further underlining this generational shift in investment preferences, a 2021 Ernst & Young survey discovered that 32% of millennial customers embraced alternative investments. In contrast, only 26% of boomer customers opted for this diversified approach to growing their wealth.

Several factors are driving millennials to explore alternative investments. Their observation of their parents’ stock and bond investments suffering during past financial crises, like the dot-com bubble and the 2008 financial crisis, has emphasized the importance of diversifying beyond the traditional 60/40 investment rule.

Millennials often exhibit a certain level of distrust or dissatisfaction with the traditional financial system. This distrust makes alternative investments an attractive option, as they exist outside the public market and can serve as a buffer against economic instability.

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