‘Feisty’ Gen Z millionaires shaking up investment world, pouring money into crypto, art
Olyvia Kwok, founder of Willstone Management, an investment, advisory services and valuation firm said that she has transacted millions worth of art in her career, declined by ‘seasoned collectors’, to Gen Z investors.
“Young people are the new buying power. They’re a huge demographic, and they’ll keep spending,” she said.
This shift reflects changing priorities among wealthy millennials and Gen Z individuals, many of whom inherited fortunes or built fortunes in technology, finance, and entrepreneurship.
“They’re young, feisty millionaires who’ve made their fortunes on cryptocurrencies or AI who are now spending it on expensive watches, wine, and art,” she said. “You’ll notice the top fashion houses trying to adapt, collaborating with influencers, producing one-off watches – and that’s why.”
While designer goods and high-end real estate remain popular, young millionaires and billionaires are increasingly allocating significant portions of their wealth to unconventional investments and experiences.
She believes that young and wealthy investors are shunning stocks and bonds in favour of art, among other things.
“They don’t care if it’s $100,000. They just think it’s cool”. They’re not interested in the classic blue-chip names like Andy Warhol, at least, not yet. “When I ask them why they don’t buy Warhol, they look at me and say, ‘Dude, I’m not 35′,” she exclaimed.
Alternative assets – investments outside traditional stocks, bonds and cash – is gaining significant traction in recent years. These can include private equity, venture capital, hedge funds, real estate investment trusts (REITs), commodities and more esoteric options like cryptocurrency, rare wines, and collectables.
“Often described as digital natives, they [young generation] have grown up with the digital world and so are more open to the idea of investing in cryptocurrencies and digital assets like non-fungible tokens (NFTs),” Stuart Porter, Wealth Coach said in an exclusive interview with Arabian Business.
Cryptocurrency and blockchain-related investments have proven particularly popular among tech-savvy young millionaires.
A new Bank of America survey revealed that almost a third of the younger rich’s fortunes are in cryptocurrencies and alternative investments such as classic cars, while the older generation only has six percent of their wealth in these asset classes.
| AGE 21-43 | AGE 44+ |
|---|---|
| Real estate investments – 41% | US stocks – 41% |
| Crypto, digital assets – 28% | Real estate investments – 32% |
| Private equity – 26% | Emerging market equities – 25% |
| Personal company/brand – 24% | International equities – 18% |
| Direct investments into companies – 22% | Private equity – 15% |
| Companies focused on positive impact – 21% | Direct investment into companies – 15% |
| Bonds – 17% | Bonds – 12% |
| US stocks – 14% | Crypto, digital assets – 4% |
Beyond alternative assets, young millionaires are showing an increased interest in impact investing – allocating capital to companies and funds that aim to generate positive social or environmental outcomes alongside financial returns.
The Global Impact Investing Network estimates that assets in impact investments grew to $1.164 trillion in 2023, with millennials and Gen Z driving much of that growth.
“I am defining “young” as Gen Z. The majority continue to invest the majority of their wealth in traditional assets like cash, fixed-income securities, real estate and equities. Their approach to investing is often driven by factors other than just investment returns. They want to know if the companies they are investing in have good environmental, social and governance (ESG) attributes,” Porter said.
Popular areas for impact investing include renewable energy, sustainable agriculture, affordable housing, and education technology. Some young millionaires are going further, creating their own impact-focused venture funds or becoming angel investors in mission-driven startups.
Footwear finance
Footwear, specifically sportswear and streetwear shoes, are becoming new areas of investment.
Earlier this month, 21-year-old Adnan Jassat, founder of sneaker trade platform, Thriller, said that he believes “sneakers should be a minor part of everyone’s investment portfolio.”
The global streetwear market is anticipated to rise at a considerable rate between 2024 and 2031, according to the latest Streetwear Market report.
According to the CFA institute article titled ‘How Sneakers Took a Grip on Investment Portfolios’ Air Jordans became prized collectables, attributed to its “cultural significance”.
Brands like Nike and Adidas, in recent times, have implemented a strategy of exclusivity with some models, only releasing a limited number of pairs at once. This has heavily fuelled the resale market, amplified by the influence of celebrities and social media.
The Dynasty Collection, featuring six individual Air Jordan sneakers – each worn by Michael Jordan in six of his NBA championship games, stands as the most expensive set of sneakers to have surfaced on the market.
Presented by Sotheby’s, the collection consists of an Air Jordan VI (1991), Air Jordan VII (1992), Air Jordan VIII (1993), Air Jordan XI (1996), Air Jordan XII (1997), and Air Jordan XIV (1998). The set sold earlier this year for a whopping $8 million.
Luxury travel is changing
While tangible luxury goods remain popular, young millionaires are also prioritising unique experiences over material possessions. This shift is reshaping the luxury travel and hospitality industries.
A McKinsey & Company report from May 2024, said that the demand for luxury tourism and hospitality is expected to grow faster than other industry segments, resulting from an expanding number of luxury travellers with net worths between $100,000 and $1 million, most of whom are “young.”
High-end travel companies report surging demand for bespoke adventures, from private expeditions to remote locations to exclusive cultural experiences in world capitals.
The report further emphasises that the lifetime value of “people in their 20s” can be significant and that offerings for that segment should be tailored to their interests including “social experiences, authenticity, sustainability and digital connectedness.”
Space tourism has recently emerged as the ultimate luxury experience, with companies like Blue Origin and Virgin Galactic seeing strong interest from wealthy young clients willing to pay hundreds of thousands of dollars for a brief journey to the edge of space.
The space tourism market is expected to grow from $1.25 billion in 2024 to a whopping $27.86 billion by 2032.
In April 2022, Axiom, SpaceX and NASA sent a spacecraft to the International Space Station (ISS) with a seat priced at $55m. The spacecraft had four people on board, including one NASA astronaut, for a journey lasting one week.
The emphasis on experiences, is not only limited to travel and space tourism, it also extends to the digital art world, where young collectors are flocking to immersive installations and digital art experiences.
The rise of non-fungible tokens (NFTs) has created a new category of digital collectables that particularly appeal to tech-savvy millennials.
Despite the shift towards alternative assets and experiences, traditional luxury sectors are adapting to appeal to younger billionaires.
According to a Bain & Company report titled ‘Long Live Luxury: Converge to Expand through Turbulence’, millennials will account for 50-55 percent of luxury market purchases, followed by Gen Z at 25-30 percent.
The report tracked nine segments of the luxury market: luxury cars, luxury hospitality, personal luxury goods, gourmet food, fine wines, fine dining, high-end furniture and housewares, fine art, private jets and yachts and luxury cruises.
Of these, luxury cars, luxury hospitality and personal luxury goods accounted for 80 percent of the total market.
Luxury fashion houses are launching streetwear-inspired collections and digital-only products for use in virtual worlds.
In the real estate segment, developers are incorporating more wellness amenities, sustainable features and smart home technology to attract younger buyers.
Experts point to several key trends that are likely to shape the future of high-end properties.
- Well-being amenities: State-of-the-art gyms, spas, yoga studios, meditation centres, massage rooms etc
- Work-friendly amenities: Meeting rooms, soundproof booths, podcast rooms.
- Family-friendly amenities: Nursery for kids, swimming pools, parks and playgrounds.
- Luxury adult facilities: Licensed bars, observation decks, lounges.
Young millionaires’ spending and investing habits
The changing preferences of young millionaires are forcing wealth management firms to evolve. Many are hiring young advisors, expanding their alternative investment offerings, and integrating more technology into their services.
“To connect with this generation, you’ve got to understand them first,” Kwok explained, “they’re spiritual, they’re liberal, and they don’t like capitalism as it’s traditionally known.”
As millennials and Gen Z accumulate more wealth and baby boomers transfer trillions to their heirs in the coming decades, these trends are likely to accelerate.
These resulting shifts in investment patterns, consumption habits, and philanthropic approaches could have far-reaching implications for the global economy.
“You’ve got these young people who’ve moved out of their parents’ homes, want their own place with a doorman, are taking private jets and buying expensive goods. For them, investing isn’t about making money,” said Kwok, “they’ve already got it”.
While young millionaires’ spending and investing habits continue to evolve, one thing remains clear: the traditional playbook for wealth management and luxury marketing is being rewritten for a new generation.
However, Porter cautions, “While alternative assets can offer the potential for higher returns and diversification, they come with heightened risks, especially in terms of volatility, regulation, liquidity, and valuation. Traditional stocks and bonds, although generally offering lower returns, provide more stability, regulatory protection, and predictability, making them more suitable for risk-averse investors. It’s important for investors to carefully assess their risk tolerance and investment horizon when considering alternative assets.”
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