Investing is all about the future. Some investors, however, are more focused on the present.
The age of an investor is key to understanding that person’s financial concerns. While some young investors are lucky enough or successful enough to spend more time thinking about the future, most young investors are still working on their own business that gave them some wealth and is designed to add to that wealth in the future.
Our newest wealth segmentation series study Financial Behaviors and the Investor’s Mindset asks numerous questions regarding an investor’s level of concern over their business. While those concerns have been moved past by some investors, young investors have their own businesses firmly planted in the front of their mind.
“Our studies are segmented by age for a reason,’’ said Spectrem president George H. Walper Jr. “The age of an investor is a significant determining factor in how they invest, and can affect almost all decisions related to investing. Unlike retired investors, or those who have already built a business, young investors are still concentrating on their core business as a source to create wealth.”
The concentration on their own business is most true among Millionaire investors with a net worth between $1 million and $5 million. Unlike Mass Affluent investors (those with a net worth between $100,000 and $1 million), Millionaire investors are perhaps more likely to work for themselves and are focused on building that business.
Asked to select factors that led to their wealth creation, 24 percent of Millennial Millionaires selected “family connections”, well above the average response of 6 percent of all Millionaires. The Millennial Millionaires were less likely to select factors such as “hard work”, “education” and “taking risk”.
Furthermore, when asked what factor “will provide a significant boost in the future to your current wealth position”, 52 percent of Millennial Millionaires selected “great income earning from current or future job” (compared to 16 percent of all Millionaires), an obvious indication they are still working, and many of them are working at running their own business.
In the study, investors were asked to list their personal concerns, and many of the concerns listed included matters related to children and grandchildren. Millennials, who might just be starting a family or not yet have children to be concerned with, were far more likely to select “concern regarding business revenues for an entity I own” (39 percent to just 31 percent of all Millionaires).
These stark differences between Millennials and other Millionaires in regards to business concerns are not matched in the higher wealth level. Among Ultra High Net Worth investors with a net worth between $5 million and $25 million, only 29 percent of Millennials and Gen Xers selected “running my own business’’ as a wealth creation factor.
Almost 40 percent of UHNW Millennials and Gen Xers admitted concern over business revenues for a company they own, compared to almost 30 percent of all UHNW investors.