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Why Millennials Are Looking to Buy More Than Simply Stocks

By Hal M. Bundrick

NEW YORK (MainStreet) -- Wealthy younger investors are much less enamored of the stock market than their elder peers and are looking for increasing portfolio allocations to alternative and private equity investments.

In a survey of accredited investors aged 18 and older, representing households with over $1 million in investable assets, excluding the value of a primary residence, or individual annual income exceeding $200,000, nearly half (49%) of young investors 18-29 are currently invested in private company securities (private placements and angel investments) compared with just 21% of 45-60 year olds.

These affluent young investors allocate an average of only 30% to equities, while Baby Boomers put nearly half (48%) of their investments in stocks. The research was conducted by iCrowd, the small business and investor social network, who says the results suggest that the "Facebook generation" may be more receptive to less traditional investments.

"When it comes to investing, the Facebook generation takes a less traditional, and much more open approach than their parents did," said Brad McGee, co-founder of iCrowd. "Young accredited investors are seeking diversified opportunities outside of traditional equities in order to protect and grow their nest eggs."

Even though wealthy Millennials allocate less to typical stock market investments, they still trust Wall Street. Nearly one-quarter (22%) of 18-29 year olds believe traditional investment firms act in their best interest, compared to only 10% of 45-60 year olds and 12% of 60+ accredited investors.

Nearly a quarter of wealthy young investors give top priority to investing in a business that supports their local community, compared to 11% of total respondents. Fully 44% of Millennials are aware that some online securities brokers allow investors to view opportunities in private company investments, as opposed to 38% of Baby Boomers. And 37% of young investors would consider buying shares in private companies and startups through an online securities broker.

--Written by Hal M. Bundrick for MainStreet