Investing off the beaten path of stocks, bonds

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The conventional wisdom that investing in stocks and bonds is the road to wealth was followed successfully for generations. But younger investors may be looking for a different path, especially after a brutal year for both stocks and bonds.

A study from Bank of America Private Bank found that 75% of high-net-worth investors between the ages of 21 and 42 “do not think it’s possible to achieve above-average returns solely with traditional stocks and bonds.” This is a stark difference from investors 43 and older, where only 32% held this view.

So, what are these investors focusing on? According to the study, the vast majority of these millennial and Gen Z investors are looking to tangible assets such as commodities and real estate.

One caveat: Because the study was limited to high-net-worth respondents, the results should by no means be considered representative of all Gen Zers and millennials. Still, the study spotlighted generational differences that may hold no matter how well off the respondents are. For example, 73% of millennials in the study preferred socially conscious “sustainable investments” that can make “a positive impact in the world.” By comparison, only 21% of older investors are interested in these so-called green investments.

The implications of the study are enormous. Bank of America notes that $84 trillion in assets is expected to transfer from boomers to younger generations over the next 20 years.