If you came into a large inheritance, how would you spend it?
If you don’t know the answer to that question, I wouldn’t blame you. Most people don’t expect to come into a sizable inheritance.
But if you still have several years left earning a paycheck, you may want to consider the question carefully. That’s because the greatest migration of wealth in American history will occur over the next 25 years.
And it could make early investors in this trend life-changing gains…
The Biggest Wealth Transfer in History
According to Cerulli Associates, a staggering $68 trillion will move from older to younger generations over the next quarter-century.
It starts with the baby boomers (born 1946–1964).
Each day in 2020, an estimated 10,800 Americans turn age 65. (By 2029, that daily number is expected to jump to 11,500.)
As baby boomers retire, they transition from the accumulation to divestment phase. And they get closer to their life expectancies.
Through the aging process, they’ll transfer a large chunk of their wealth to their Generation X (born 1965–1980) and millennial (born 1981–1996) children.
How will younger generations invest their new inheritance money?
Charles Schwab has over $4 trillion in client assets and more than 12 million active brokerage accounts. It says these two generations are buying three sectors (technology, communication services, and consumer discretionary) and one new asset class (bitcoin)…
| Millennials | Gen X | Baby Boomers | |||
| Amazon.com | 7.87% | Apple | 10.52% | Apple | 9.19% | Apple | 6.18% | Amazon.com | 7.16% | Amazon.com | 5.32% | Tesla | 3.22% | Berkshire Hathaway | 2.37% | Berkshire Hathaway | 2.75% |
| 3.03% | 2.26% | Microsoft | 2.69% | ||
| Grayscale Bitcoin Trust | 1.84% | Microsoft | 2.16% | 1.43% | |
| Berkshire Hathaway | 1.73% | Tesla | 1.45% | Visa | 1.25% |
| Walt Disney | 1.68% | Alphabet | 1.30% | Alphabet | 1.23% |
| Netflix | 1.58% | Netflix | 1.29% | AT&T | 1.17% |
| Microsoft | 1.53% | Alibaba Group Holding | 1.23% | Boeing | 1.08% |
| Alibaba Group Holding | 1.39% | Visa | 1.23% | Alibaba Group Holding | 0.98% |
| Key: Technology, Communication Services, Consumer Discretionary, Bitcoin | |||||
Source: Schwab Report, December 2019
In the table above, Gen Xers and millennials own 11 distinct stocks. And nine of them (highlighted above) – or 82% – belong to three sectors: technology, communication services, and consumer discretionary.
That old saying, “buy what you know” applies to younger generations.
Think about it… Many millennials and Gen Xers shop online (Amazon)… spend time on their iPhones (Apple)… live on social media (Facebook)… use Gmail (Google)… And binge-watch movies and TV shows (Netflix).
Credit Suisse reports the average S&P 500 company has a life span of less than 20 years today. So 25 years from now, new companies will form and existing ones will gain more traction.
With an average market cap of over $777 billion, these nine stocks have staying power.
And as you can see above, the Grayscale Bitcoin Trust (GBTC) is already millennials’ fifth-largest holding at Schwab.
Today, only 9% of the U.S. population owns bitcoin. And about 30% of them are millennials…
Here’s why that’s important…
S-Curve methodology states the amount of time for most new tech to go from 0% to 10% adoption is the same amount of time it takes to go from 10% to 90% adoption.
So if bitcoin is akin to the microwave, cell phone, and internet, 90% of people will be using it by 2029. By then, though, it will be too late to make life-changing gains in this emerging asset class.
As Daily editor Teeka Tiwari says, Wall Street is already preparing for this onrush of younger people into crypto…
Wall Street is laying the groundwork for the biggest financial shift in history. The smartest money in the world is getting involved in cryptos. This will pave the way for retail products like exchange-traded funds (ETFs), crypto savings accounts, and borrowing services.
We should also see major online brokers roll out bitcoin trading and custody in the years ahead. So tens of millions of everyday investors will be able to buy bitcoin directly in their existing accounts.
That’s why it’s so important to act now. If you don’t, you’ll be late to the party.
How to Play the Great Wealth Transfer
The great wealth transfer is underway.
Analysts estimate $15 trillion of the $68 trillion will be passed to boomer heirs in the next decade alone.
As younger generations inherit gobs of assets, they’ll have much more money to invest. And they’ll mainly buy new-age tech stocks and crypto.
Here’s Teeka again…
This global younger generation is set to inherit about $68 trillion worth of their parents’ wealth. In my opinion, a lot of that money is going to find its way into digital assets.
The “millennial effect” was never anything I looked at as something that would really move the needle on crypto prices. On further reflection, I’ve come to realize millennials will be an entirely new source of massive demand.
So if you’re looking to profit from this intergenerational wealth movement, there are a couple ways to play it…
You can buy a handful of the stocks listed above. Apple, Amazon, Facebook, Tesla, Microsoft, Netflix, and Google are a good start.
Or you could buy the O’Shares Global Internet Giants ETF (OGIG) and iShares Global Comm Services ETF (IXP) instead. (They provide increased exposure to the nine stocks I mentioned earlier.)
And you should also start with a small stake in bitcoin. It’s the gateway to other digital assets. So it’ll rocket in price as crypto adoption increases in the future.
Regards,
Grant Wasylik
Analyst, Palm Beach Daily
P.S. The great wealth transfer will create massive buying in just a few sectors, including crypto. And there’s one technology behind crypto Teeka believes will be the investment of the decade…
You see, not only does this tech power crypto, it’s disrupting several industries, from health care to finance.
Teeka’s put his reputation on the line and pulled back the curtain on this emerging trend. You can learn more about it right here.