Rich Millennials Have Lost Confidence in Stock Market, BofA Says
Wealthy young Americans have lost confidence in the stock market as a primary vehicle for creating wealth and are increasingly turning to alternative investments to fund their futures, a Bank of America survey has found.
Individuals ages 21 to 42 with at least $3 million in assets have only a quarter of their portfolio in equities, compared with more than half for those who are older, according to the study, which was released Tuesday.
Wealth managers have traditionally recommended more stock market exposure for young people, given their longer investing window. That’s worked historically, with the benchmark S&P 500 posting an annualized average return of almost 12% from its inception in 1957 through the end of 2021. Since the beginning of the year, however, the index has tumbled 24% amid turbulent markets and rising inflation.
The lack of faith in equities indicates that younger generations increasingly think “a traditional portfolio of stock and bonds is not going to deliver above-average returns over time,” Jeff Busconi, chief operating officer at Bank of America Private Bank, said in an interview. “We’ve had a very strong run in the stock market over the last decade and are now living through volatile times. That’s on the front of people's minds.”
