The 2018 Insights on Wealth and Worth survey provided some startling information about the priorities of high net worth (HNW) investors. More than one-half (54 percent) indicated long-term capital appreciation was a higher priority than income generation. The other 46 percent were looking for steady income.
Let’s look at the percentages by age group:
• Millennials: 56 percent capital appreciation / 44 percent steady income
• Gen X: 56 percent capital appreciation / 44 percent steady income
• Baby Boomers: 56 percent capital appreciation / 44 percent steady income
• Silent Generation: 46 percent capital appreciation / 54 percent steady income
Millennials (ages 21 to 37), Gen Xers (ages 38 to 53), and Baby Boomers (ages 54 to 72) prioritize steady long-term income to the same extent.
Older investors, who are near or are in retirement, tend to emphasize steady long-term income because they need to maintain their standard of living in retirement. However, one of the advantages of youth is these investors have the time and flexibility to take on higher levels of risk and recover from any market downturns. In other words, younger investors prioritize capital appreciation (i.e., growth) while older investors prioritize income.
It’s important for younger investors to consider their life goals and how their finances may support the pursuit of those goals.