Earlier start
According to HSBC’s Affluent Investor Snapshot 2024, which looks into the investment portfolios, behaviours, and priorities of affluent individuals around the world, the younger generations are beginning their investment journey earlier than their older counterparts.
On average, those in Gen Z (ages 25 to 27) began investing at 23, while Millennials (ages 28 to 43) began investing at 27. This compares to 33 for Baby Boomers (ages 60 to 69) and 31 for Gen X (ages 44 to 59).
In addition to investing earlier, Gen Z and Millennials are also dedicating a higher proportion of their income towards investing. Both Gen Z and Millennials invest 27% of their monthly net income, on average. This compares to 24% for Gen X and 22% for Baby Boomers.
Different investments
Affluent investors of all generations, on average, own four asset classes – with asset class diversification increasing with their level of investable assets. However, HSBC’s survey demonstrates a growing awareness and higher intent to own alternative investments among Gen Z and Millennials.
The younger generations exhibit a strong interest in adding private market funds and hedge funds to their portfolios over the next three years. 25% to 27% of Millennials reported high future interest in hedge funds, private credit funds and private equity funds, compared to just 19% to 20% of Baby Boomers.
Lavanya Chari, global head of investments and wealth solutions at HSBC Global Private Banking and Wealth, commented: “The fact that young investors are looking more closely at alternative assets serves as another tailwind for the asset class, as product and platform innovations improve accessibility for a wider range of investors, especially to private markets.”
On average, cash holdings represent 32% of an affluent investor’s portfolio. Of those who plan to change their asset allocation, however, over half (54%) intend to invest their current cash holdings – though this intent varies from generation to generation. Gen Z and Millennials plan to invest 61% and 56% of their cash, respectively, compared to just 49% of Baby Boomers.
Different goals
Financial goals also vary from generation to generation.
Gen Z were the only generation not to list ‘having enough insurance coverage’ within their top five financial goals, instead prioritising investing in properties and securing multiple income streams. In contrast, Baby Boomers’ prioritised planning for retirement and securing money for vacation or leisure.
All generations put gaining wealth for financial security as their first or second financial goals, with planning for retirement also making each generation’s list.
The Affluent Investor Snapshot captures insights from over 11,000 affluent investors, aged 25 to 69, with assets ranging from $100,000 to $2 million (around £75,570 to £1.5 million). The study was conducted by Intuit Research.