The Great Wealth Transfer:
Redefining Wealth and Markets for Millennials
A huge handover of wealth across generations is on the horizon. Widely called “The Great Wealth Transfer”, this grandiose term may in fact be an understatement, as studies show a record $90 trillion in the USA will be passed down gradually over the next 20 years. This seismic financial shift will largely affect millennials, born between 1981 and 1996, who are poised to inherit most of this sum from their Baby Boomer relatives. Here we’ll look at how this transition will not only redefine personal wealth but also buck current trends in market dynamics, consumer behavior and societal structures.
Impact on Markets and Investments
Millennials are already showing markedly different investing preferences from previous generations. 75% of these younger investors believe that traditional stocks and bonds alone can’t deliver above-average returns. Among 21 to 42 year olds who already have portfolios, 73% own sustainable and impact investments, almost triple the average across all ages.
As more millennials find themselves in a position to build a portfolio, this change points to a future where sustainability will no longer be a niche interest but a core component of investment strategies.
Consumer Behavior:
Real Estate and Daily Purchasing Habits
The wealth transfer will also redefine ownership and purchasing habits, especially in real estate. Some millennials, currently hindered by student debt and rising interest rates, may soon have the means to overcome these challenges and take their first step onto the housing ladder.
The traditional real estate process could see a focus toward more flexible and rapid models, such as cash purchases of probate properties. While only the wealthiest 10% of boomers hold the vast majority of the $90 trillion to hand down, 80% of boomers in the USA are homeowners, meaning huge swathes of the population from all social backgrounds will be looking at selling a home in probate through 2045.
Services offering cash purchases guarantee a sale and the stress-free transactions can be complete in as little as seven days. These are only expected to grow in popularity, as millennials look to them to quickly and efficiently liquidate these assets.
Gender Equality in Wealth
Women are set to gain unprecedented financial influence, having been predicted to control over half of the $90 trillion figure by as early as 2030. This shift could drastically reduce the gender wealth gap and redefine investment strategies, fostering a more inclusive economic environment in place of today’s standards, where women founders receive only 2% of venture capital funding. As investors, women’s tendencies may amplify the wider millennial trend as they, too, prioritize sustainable and impactful investing.
This also brings hope for the marked gender gap in money confidence, where for women this confidence jumps from 41% to 81% after receiving financial windfalls. This shift suggests that women’s increasing control over wealth could lead to more diversified investments and greater economic participation, potentially transforming sectors that benefit from gender-diverse funding.
As we look towards the 2040s, nearly every millennial will make financial decisions influenced by inherited wealth. This will not only shape personal finances but also drive broader market trends, such as the rise of sustainable investments and the landscape of real estate. Only just around the corner, The Great Wealth Transfer will be a pivotal era for investors, consumers, and policymakers alike.
