Comparing Portfolio Differences by Age


Every investor has individual priorities which make their portfolio unique, even though there may be similarities based on an investor’s age or wealth level.

But there is a basic theory which plays out throughout Spectrem’s annual portfolio study:
The more money you have, the more money you have to spend.
Spectrem’s annual study of investor assets and investment allocations – Portfolio Trends, Expenditures and Perception of Providers - shows that wealthier investors have a wider range of investment opportunities. It also shows that the older the investor is, the more likely they are to have more investable assets.
Over time, investors move out of investment options which no longer appeal to them or their financial needs. While Millennials are likely to have a large portion of their assets assigned to pay for their home or apartment, older investors are often settled into a home they paid off or have a much-reduced mortgage to worry about. That’s a huge difference that leads to a significant increase in investable assets for older investors.
Younger investors are also raising a family, and dealing with the costs associated with that. Older investors have either completed the task of raising a family or reduced their costs to college funding if applicable.
Portfolio Trends, Expenditures and Perception of Providers indicates those many differences in investable asset allocations.
In the interest of comparing your portfolio to others in your age or wealth segment, here are some key research points from the study:
Millennials with a net worth of at least $100,000 (not including the value of their primary residence) average having half of their net worth assigned as investable assets. That’s 21 percent less than the investable asset percentage of World War II investors. They are much more likely than others to have assets in a privately held business (19 percent of assets on average), and more likely than others to have investment real estate.
Gen X investors lead all investors in percentage of assets assigned to defined contribution accounts (12 percent). They also have 13 percent of their total assets spent on paying for their principal residence. Retired investors are required to take disbursements from defined contribution and IRAs, so their percentage of assets in that category is by definition lower than for younger investors. The same is true for Baby Boomers as they reach 70 and above.
Baby Boomers have two-thirds of their total assets available as investable assets, having cut down on their privately held business investment (2 percent), defined contribution (10 percent) and principal residence (12 percent).
As previously mentioned, World War II investors have 71 percent of their total assets aside as investable assets.
The details of investable assets for investors is examined through the rest of the Spectrem study, as well as a look at their perceptions of financial providers.