Rich Millennials and Generation Z view investing differently than older generations

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As it turns out, not all rich people are created equal, according to a recent Bank of America study of wealthy Americans. In fact, your generation has a lot to do with how you view investments and related issues. This makes sense when you consider that the economic landscape for the Silent Generation and Baby Boomers, who are largely retired and past their working years, is significantly different than that for Gen Zers and Millennials, who are still in the early stages of building wealth condition .

Younger investors have different attitudes than their older counterparts, which affects how they invest their wealth – and that could transform the stock market and other investment opportunities in the coming decades.

The study defined the “rich” as those who had assets of at least $3 million. The percentage of each generation that fits this calculation is as follows.

• Generation Z (ages 21-26): 1%
• Millennial (ages 27-43): 12%
• Generation X (ages 44-56): 16%
• Baby Boomers (ages 57-76): 65%
• Silent generation (aged 77 and over): 7%

Let's take a look at how some of these investment differences play out between generations.

How they see investment opportunities

Most people in the Silent Generation and Baby Boomers built their wealth in the stock market, through traditional stocks and bonds and other traditional investments.

However, younger wealthy people have a wider variety of investment options, including digital assets, cryptocurrencies and more, that their older counterparts may consider too risky.

Here are the percentages of Generation Zers and Millennials (ages 21 to 43) who reported the following investment opportunities that offer the greatest growth opportunities.

• Real estate investments: 31%
• Cryptocurrencies/digital assets: 28%
• Private equity: 26%
• Personal Business/Brand: 24%
• Direct investment in companies: 22%
• Companies focus on positive impact: 21%
• Fixed-interest securities: 17%
• US stocks: 14%

Now compare that to what the Generation X, the Boomers and the Silent Generation (those over 44) have said.

• US stocks: 41%
• Real estate investments: 32%
• Emerging market stocks: 25%
• International stocks: 18%
• Private equity: 15%
• Direct investment in companies: 15%
• Fixed-interest securities: 12%
• Cryptocurrencies/Digital Assets: 4%

Younger generations have a greater tolerance for risk

This data shows that people under age 44 may be more willing to take risks on the types of investments that people age 44 and over may view as risky, new, or unproven.

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Let’s take cryptocurrencies and digital assets as an example. Only 4% of older generations surveyed see this as a major growth opportunity, while 28% of those under 44 do.

Younger generations made larger adjustments to higher interest rates

Higher interest rates can be a boon for investors. Across all generations, the study found that 58% of wealthy people made financial adjustments when interest rates rose, including 91% among younger generations.

Younger people reduced spending, paid off debt, or delayed selling or buying a home, largely because younger people are more affected by debt than their older peers.

About half of younger investors changed their investments to take advantage of higher interest rates, while only 37% of older investors did the same, which could indicate that older adults are more secure in their assets or may have fewer expenses and debt.

In a snapshot, here's the percentage of 21-43 year olds who have made these changes.

• Changed investment approach: 50%
• Lower expenses: 23%
• Debt payoff: 34%
• Reduced credit utilization: 27%
• Delayed home sale or purchase: 19%

And here's the percentage of those in the 44+ group who did the same.

• Changed investment approach: 35%
• Lower expenses: 15%
• Debt repayment: 11%
• Reduced credit use: 10%
• Delayed home sale or purchase: 6%

Social media is a key driver of younger people’s financial decisions

Perhaps unsurprisingly, the under-43 demographic is more likely to use social media as their primary source of financial information. According to the study, 48% of younger generations prefer social media for financial content, compared to just 6% of those over 44.

Those 44 and older, on the other hand, prefer online articles, with 55% saying this is their preference for consuming financial content.

What it all means

Why this is of interest has to do with the fact that when the Silent Generation and Baby Boomers die, they will leave a significant portion of their wealth to these younger generations, in what is known as the “great wealth transfer.”

Newer technologies will shape the way wealthy investors invest – and also change the future of investing.