Young investors in their 20s and 30s are not rebelling against traditional investment approaches advocated by their parents, a new survey from the Merrill Lynch Private Banking and Investment Group has found.
The vast majority of the young investors are not turning to friends and peers in their social networks for investment guidance. Contrary to these and other stereotypes, differences between investors in this generation and their parents’ generation are more subtle, according to the Young High Net Worth Insight survey by Merrill Lynch Private Banking and Investment Group.
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The Young High Net Worth Insights Survey reveals goals, behaviors and concerns of investors ages 18 to 35 with investable assets of US$1 million or greater. The data is supported by qualitative insights from Michael Liersch, Ph.D., director of behavioral finance for Merrill Lynch Wealth Management, as well as private wealth advisors with the company’s Private Banking and Investment Group who work with hundreds of wealthy young investors.
Survey participants include those who inherited much of their wealth and those who acquired it through entrepreneurial ventures or lucrative professions.
Data from the survey shows that 69% believe their parents had the right investing approach, while 31% think their parents should have approached investing differently.
The findings also show that 65% young investors surveyed believe their parents’ approach to investing still works in today’s environment, while 35% believe it does not work.
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By GlobalDataWhen asked about their investment priorities, survey participants indicated that, while they desire growth, they also understand the need for diversification to reduce risk. Other findings include:
- 88% are looking to grow their assets, while 12 %prioritize wealth preservation over growth.
- 63% are willing to take on greater investment risk for the potential of higher returns, while 37% would prefer lower investment risk, understanding it may result in lower potential returns.
- 78% make investment diversification a priority in order to reduce risk, while 22% would sacrifice diversification for the potential of increased growth.
- 40% rely on a more traditional "buy and hold" investment strategy, whereas 31%regularly buy and sell in the hope of outpacing the markets and maximizing gains.
