On average, Americans ages 21 to 42 with at least $3 million in investable assets hold only 25% of their assets in stocks or stock funds, according to aWhy the disconnect? Although advisors generally recommend that younger investors hold the vast majority of their investments in stocks, wealthy young people are skeptical that traditional investments can get the job done.
Why are young, affluent investors pulling away from stocks? It could be that there are newer, fresher ideas out there, says Ken Shepard, head of investments at Bank of America Private Bank. Meanwhile, plenty of alternative investments have made a lot of people a lot of money over the past few years. But be careful basing your investment choices on recent returns.
Even if you have enough money to get in the door, there's little to suggest you'd be better off. For one thing, these investments often come with a high level of risk that everyday investors may not be equipped to handle.to see how fortunes can be rapidly lost on alternative investments. Even something seemingly steady, like owning rental properties, can hurt your finances if things go wrong.
Take it from Warren Buffett: "When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients. Both large and small investors should stick with low-cost index funds."
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