We Surveyed Millennial Investing Habits-They Do Not Trust the Stock Market

Considering their first two decades in the workforce, it's little wonder millennials hold a dim view of the stock market-so what investments are they
Millenials And Investing

Alto’s mission is to expand access to investment opportunities previously inaccessible to most Americans. So, naturally, we wanted to better understand millennials’ investing habits, including their thoughts on alternative investments and whether they even see retirement as an option. After all, this is a generation that has been shaped by recession.

Not only were they likely to have seen their parents’ retirement accounts take major hits during the dot-com bubble, Great Recession, and most recently the COVID crash, they themselves have been severely impacted by these events. In their first 15 years in the workforce, millennials experienced slower economic growth than any previous generation in American history. So it would be understandable if millennials aren’t very optimistic about the future.

According to our research, that isn’t necessarily the case.

Millennials Hope to Retire Early … But There’s a Catch

Considering the many setbacks faced by the United States’ largest living generation, on average, millennials hope to retire at 59-eight years before full Social Security benefits become available to them. But as the expression goes, “Hope is not a strategy.”

While millennials may wish to retire early, just one in four are very confident they’ll be able to do so. What’s more, we found that 53% of millennials are worried about being able to retire at any age. No wonder about two in three millennials say the path to retirement is less clear than it was for their parents.

These concerns also vary significantly by gender. Our research found that while 39% of millennial men are very confident that they’ll be able to retire at their desired age, only 13% of millennial women feel similarly confident.

Though this research didn’t dive into the myriad reasons for this gap in confidence, it did find that men, on average, had more investable assets than women. Likewise, we found millennial men significantly more likely to believe they have the right investments to achieve their retirement goals.

But what are the “right investments”? First, we need to look at millennials’ feelings toward the stock market.

Millennials Are Not Very Confident in the Stock Market

Perhaps unsurprising given the volume and frequency of stock market downturns they’ve experienced during their relatively short time in the workforce, millennials are not confident in the stock market. Three out of four both fear that a market crash could wipe out their savings and equate stock market investing to gambling.

For millennials, there’s a clear concern about the riskiness of stock market investing and a lack of faith in the current market. In fact, just 42% of millennials surveyed said they were very open to investing in the stock market.

If this is the case, though-and 70% of millennials believe it’s too risky to put most of their retirement money in stocks-what are they interested in investing in? Despite the uncertainty, millennials demonstrated a high interest in alternatives investments. Especially cryptocurrency.

Alternative Investments Have Millennials’ Interest

Whether most know them as alternative investments (or assets), interest is high. Of those surveyed, 85% of millennial respondents expressed interest in alternatives. As did 81% of Gen Xers and 70% of baby boomers.

Most interesting to millennials are crypto, real estate, innovation funds, and angel investing, which can all be great portfolio diversifiers. And this is key.

Alto was started to give everyday investors the same opportunities to diversify their portfolios as wealthy and institutional investors. Of course, this doesn’t mean excluding traditional public market investments. It just means that these investments shouldn’t comprise your entire portfolio.

Consider that the typical 401(k) is mostly just stocks and bonds, with the ratio determined by your target retirement date and risk appetite. However, look at the portfolio breakdowns of successful university endowments-like that of Yale University, which achieved an impressive 40.2% return for the 2021 fiscal year-and you’ll find a mix of public and private equities.

Because alternatives vary in their correlation with stocks (and each other), a portfolio containing a variety of assets is less likely to be severely impacted by one asset’s poor performance. Spreading risk across a greater diversity of assets also enables investments that, while riskier, have the potential for returns seldom seen in the public markets. (Example: A startup could fail, but it could also become wildly successful, generating massive returns for those who invested early.)

It’s not just the potential for gains, though. Participants across all age groups cited the ability to invest in areas that they care about as almost as motivating.

So why aren’t more millennials investing in alternative assets?

Historically, Access to Alternative Investments Has Been Limited

For the everyday American, how to invest in real estate, venture capital, and even art has remained a bit of a mystery. For starters, many of these investments required large sums of money. It’s no wonder 49% of millennials believe you have to be “very wealthy” to invest in alternatives!

Additionally, investing in the next Amazon or Facebook has often been by invite only. As such, these opportunities were typically available to only a handful of lucky individuals. Until recently.

Today, alternatives are more accessible than ever for several key reasons:

  1. The JOBS Act of 2012 expanded access to crowdfunding, providing businesses with a new way of fundraising and individuals the opportunity to invest in private businesses.
  2. The Securities Exchange Commission (SEC) expanded the definition of accredited investors, allowing more people to invest in private offerings.
  3. The rise of fractional ownership via new investing platforms made it possible to invest in shares of securities. (For example: A share of a painting or real estate offering.)
  4. The self-directed IRA process has been streamlined by companies like Alto. This has enabled investors to use their tax-advantaged retirement funds to participate in these opportunities.

Now, you can diversify your portfolio by investing in alternatives. And you don’t need to be wealthy or well-connected to do it. Just keep in mind that it’s important to do your homework before investing. Investing, especially in crypto, involves risks, including risk of loss. You might also consider talking to a financial advisor.

Alto's 2022 Alternative Investing Report: How Millennials See Their Financial Future

Read the full report on millennials and investing.
Download our report for more findings about the investing habits of millennials, as well as Gen Xers and baby boomers.

Diversify Your Portfolio with Alto

With Alto, you can invest in alternatives using money from your bank account or by rolling over funds from an old 401(k) or other IRA. That means the same tax advantages you’d expect from any traditional, Roth, or SEP IRA. Only you get to choose how you invest your money.

  • Alto CryptoIRA® lets you buy and sell [acf field=”crypto_number” post_id=”options”] digital assets through Coinbase integration. With no monthly account or setup fees!
  • Alto IRA enables you to invest in art, startups, venture capital, private equity, real estate, and more for much less than you’d expect. And without complicated or hidden fees.

Ready to start diversifying your portfolio the way professional investors do? Open an Alto IRA or CryptoIRA today.


Alto is an administrator of IRAs, is not a fiduciary, and does not provide investment advice. Nothing herein shall be construed as financial, legal, or tax advice or a recommendation or solicitation of any particular investment, security or cryptocurrency. All information in this article is solely for information purposes. Investors are responsible for conducting their own due diligence regarding all self-directed IRA investments.


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