Why Millennials and Gen Z Investors Are Shifting Toward Alternative Investments
Investments are no longer just about stocks and bonds for younger generations. A new Bank of America study shows that over 70% of investors aged 21 to 43 believe the old-school approach just won’t cut it anymore. They are looking for more than market averages. Plus, they want bigger upside, more control, and smarter risk.
Millennials and Gen Z grew up watching financial systems shake. First in 2008, then again in 2020. That kind of exposure doesn’t just go away. It changes how people think. For many, public markets feel too fragile or even rigged.
So, they are looking elsewhere. And that “elsewhere” is alternative investments.
Alternative Investments Are Hot Right Now
Investments like private equity, venture capital, crypto, and real estate are not just buzzwords anymore. They are legit parts of younger investors’ portfolios. These options often have lower ties to the traditional market swings. That means more chances for growth, with less riding on Wall Street’s mood swings.
Freepik / The study finds that 41% of young investors say they are playing the long-term game. Another 39% want to spread out risk and protect their money from inflation or crashes.
Alternatives give them tools to do both. It is a double win: grow money and guard it.
This new wave of investments would have been hard to access a decade ago. Not anymore. Thanks to platforms like Robinhood, Forge Global, and others, getting into these markets is as easy as opening an app. Fractional ownership means you don’t need a million bucks to own a slice of real estate or a piece of a startup.
Blockchain tech takes it even further. Tokenization makes it possible to invest in things like rare art or high-end collectibles. What used to be locked away for the ultra-wealthy is now open to almost anyone with a smartphone and a little capital.
Gen Z Has Unconventional Investment Approaches
Forget boring financial reports. Gen Z is getting investment advice from AI tools, TikTok, and Instagram. That may sound risky, but it is actually changing the game. They are fast, adaptive, and hungry for insights that match their goals. They cross-reference, fact-check, and follow influencers who speak their language.
AI-driven platforms give them personalized tips based on real data, not guesswork. They are combining tech and community to move faster and smarter. And when something feels off, they pivot quickly.
Freepik / According to the study, over 80% of Gen Z and nearly three-quarters of Millennials prioritize ESG-aligned investments.
Here is something Wall Street didn’t see coming. Younger investors don’t want to pick between doing good and doing well. In fact, 75% believe sustainable investments can deliver strong returns. This is a belief that money and mission can grow together. Think solar energy, social impact startups, and companies that actually treat people and the planet well.
Right now, Millennials and Gen Z allocate about 31% of their portfolios to alternatives. Older generations? Just 6%. That gap says a lot. And it is only getting wider. A massive 93% of young investors say they plan to put even more money into alternatives in the future.
Meanwhile, older investors still park about 75% of their money in traditional stocks and bonds. But that model is fading. The younger crowd is building something different, which is more flexible, more tech-savvy, and more impact-driven.
Over $100 trillion is expected to pass from Boomers to younger generations by 2040. Millennials and Gen Z take the reins, and alternative investments will go from niche to mainstream.