Why Young Wealthy Investors Are Fleeing Stocks—and How to Follow Their Lead

The investment landscape is undergoing a quiet revolution. A recent Bank of America Private Bank survey reveals that younger high-net-worth investors (ages 21–43) are systematically reallocating their portfolios away from traditional stocks and bonds. These investors now allocate just 17% to alternatives, compared to a mere 5% among older investors, with 93% planning to increase this stake further. The shift is driven not by fear but by a strategic embrace of non-traditional assets—gold, fractional art, and institutional real estate—as hedges against market volatility and inflation. For investors seeking to mirror this generational pivot, understanding these moves is critical.

### The Case Against Traditional Markets
Younger investors are disillusioned by the post-2008 financial crisis and 2020 pandemic market volatility, which exposed the fragility of conventional portfolios. A staggering 72% believe stocks and bonds alone can't deliver above-average returns, a stark contrast to older investors (28%). Their skepticism is compounded by the rising correlation between stocks and bonds, which erodes diversification benefits. This cohort seeks assets that move independently of equities—a key reason gold, art, and real estate are gaining traction.

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#### 1. Gold IRAs: The Timeless Hedge Against Uncertainty

Gold has long been a refuge during economic turbulence, and younger investors are leveraging it through self-directed gold IRAs. The Bank of America survey found 45% already own physical gold, with another 45% planning to acquire it.

Why now?
- Inflation Defense: Gold historically retains value during periods of price spikes.
- Portfolio Diversification: It has a near-zero correlation with stocks.
- Performance: Gold prices rose 14% in 2024 amid geopolitical tensions and Fed rate uncertainty.



Action Item: Allocate 5–10% of your portfolio to gold via an IRA to insulate against market swings and inflation.

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#### 2. Fractional Art: Democratizing High-Value Assets
Platforms like Masterworks enable investors to buy shares in fine art, a strategy resonating with younger generations. The survey highlights their appetite for alternatives, with 49% owning crypto and 38% interested in expanding into art.

Why art?
- Historical Returns: Masterworks reports average annualized returns of 17% since 2017.
- Cultural Alignment: Younger investors prioritize tangible, socially resonant assets over abstract equities.
- Liquidity: Fractional platforms offer secondary markets for faster exits than traditional art sales.



Action Item: Allocate 2–5% to fractional art via platforms like Masterworks for diversification and cultural capital.

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#### 3. Institutional Real Estate: Steady Returns in a Volatile World
The Bank of America survey identifies real estate as the top non-traditional asset class after crypto. Younger investors are turning to institutional platforms like FNRP (Fundrise), which pools capital into commercial properties, offering steady cash flows.

Why real estate?
- Income Stability: FNRP's offerings average 5–7% annual returns with monthly distributions.
- Inflation Hedge: Property values and rents typically rise with inflation.
- Diversification: Real estate has a low correlation with equities.



Action Item: Dedicate 10–15% to institutional real estate via platforms like FNRP for predictable income and inflation protection.

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### The Broader Shift: Sentiment and Market Context
Bank of America's June 2025 sentiment reports underscore a broader exodus from U.S. equities. Only 23% of fund managers see U.S. stocks as top performers over the next five years, while 54% favor international equities. This global pivot, coupled with rising cash allocations (10% overweight in March 2025), reflects a strategic rebalancing. Younger investors are also prioritizing social impact, aligning investments with causes like homelessness and climate action—a trend wealth managers must address.

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### Final Takeaways for Investors
The data is clear: traditional portfolios are no longer sufficient. To mirror the strategies of younger high-net-worth investors, consider:
1. Allocate 5–10% to gold IRAs for inflation and volatility protection.
2. Invest 2–5% in fractional art for cultural capital and diversification.
3. Commit 10–15% to institutional real estate for steady income and inflation hedges.

The Bank of America survey predicts that younger investors will control $30 trillion in U.S. wealth over the next decade. By following their lead into non-traditional assets, investors can position themselves to thrive in an era of heightened uncertainty—and capitalize on the next wave of wealth creation.

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