Gen-X and Gen-Y millionaires work hard to grow their money and actively look for ways to give it away, according to Fidelity’s sixth annual Millionaire Outlook.1
Born between 1965 and 1979, Generation X is a generation in which “entrepreneur” became an accepted career choice. And understandably so. They “came to maturity as reengineering, corporate restructuring, and widespread reductions in force obliterated the concept of lifetime employment,” according to the Center for Talent Innovation.2 Instead of the loyalty to employers that characterized the boomers, their parents' generation, Xers searched for ways to become self-sufficient on their own terms.
In short, the perfect model for a modern millionaire.
Given the success of such diverse Gen X entrepreneurs as Michael Dell (Dell Computer), Larry Page and Sergey Brin (Google), and Sara Blakely (Spanx), it’s not surprising that many Generation Y-ers (born beginning in 1980), would choose to follow the same path. Still, millionaires from both groups also credit previous generations with helping to pave the way. According to the study, Gen X/Y millionaires were three times more likely than boomers to say that inherited money played an important role in building their wealth, which they then worked hard to grow.
So, what’s distinctive about these young millionaires? Here are four traits that emerged from our study.
1. Find investing enjoyable
While Gen X/Y millionaires value their parents’ money, they didn’t inherit the same sentiments about it. Indeed, they have the most positive current financial outlook in the history of Fidelity’s study. On a scale where +100 represents the most favorable outlook, zero is neutral, and –100 is the most negative outlook, this year’s study found that the current financial outlook of today’s wealthy Gen X/Y millionaires is at +51, a whopping 58 points above boomers millionaires.
The reason for the giant generational bounce may have less to do with the age difference and more to do with the younger groups' comfort and confidence in using the Internet to research and assess financial data. Gen X/Y millionaires say they feel knowledgeable about investing (71%), and nearly twice as many than older millionaires find investing enjoyable (72%). “Gen X/Y millionaires are hands-on, sophisticated investors,” explains John Sweeney, Fidelity executive vice president of retirement income and investment insights.
2. Will go out on a limb
Despite recent financial crises, younger millionaires are also three times more likely than their older peers to see money as a source of opportunity. Nearly three-quarters (73%) of Gen X/Y millionaires say that they have increased their involvement in investments in the past five years.
And they are more aggressive investors—73% of Gen X/Y millionaires are willing to go out on a financial limb, and put a higher portion of their portfolio in risky investments. They also trade a lot, averaging 30 trades per month. And while older millionaires stick to a steady investment strategy (43% didn’t add any new asset classes in the last year), their younger counterparts are more likely to choose complex investments like foreign currency, international stocks, venture capital, and derivatives.
"That’s not to say that wealthy Gen X/Y investors are reckless. Gen X/Y millionaires have taken personal accountability for their financial futures,” notes Sweeney. “They’re getting educated, staying involved, and seeking guidance from financial professionals and other trusted sources—a good roadmap for all investors.”
3. Get a second opinion from an expert
As they look for ways to grow their wealth, Gen X/Y millionaires are significantly more likely to work with financial advisers than boomers (92% vs. 68%). They use advice differently, too. While boomers overwhelmingly (73%) rely on their advisers for general investment and portfolio management, younger millionaires (61%) consult an adviser for a second opinion, preferring to make their own investment decisions.
Even though they favor advisers as their primary source for investing ideas, Sweeney observes, “These new millionaires are collaborators, not delegators. They’re looking for a validator to partner with on their investments, not someone to manage their portfolio.”
This approach has received the ultimate bottom-line validation: Gen X/Y millionaires average $5.7 million in total assets (with the exception of real estate), neatly outstripping the average $5.2 million in assets possessed by older millionaires.
4. Are generous—to others and themselves
Young millionaires are generous about giving their time and money to charitable causes: Nearly twice as many (82% X/Ys versus 49% boomers) in the study are likely to volunteer or serve on the board of a charity, and they average $54,000 in donations each year. And 68% are willing to pass along as much of their wealth as possible to their heirs, kick-starting the next generation of millionaires.
Confident about their ability to make and manage money, the younger millionaires also have a more relaxed approach than the older generation to living with wealth. The vast majority (91%) of Gen X/Y millionaires feel wealthy, compared to 74% of boomers. They’re more likely to treat themselves to the trappings of the good life, buying more vacation homes, boats, and country club memberships, taking foreign vacations, and flying first class.
So, even though they may take a more confident approach to growing and showing their wealth, these newest millionaires are equally comfortable sharing it.