The Rise of Alternative Investments: How Young Investors Can Build Wealth With CRE

As millennials and Gen Zers enter the phase where long-term investment planning becomes a priority, their approach to wealth creation diverges from previous generations. Whereas Gen X and earlier generations predominantly relied on stocks, real estate, and bonds as key vehicles for building wealth, younger adults increasingly gravitate toward alternative investments. 

‍

This shift reflects a broader trend in how younger generations navigate the evolving financial landscape. What drives this change? What are some of the reasons why young investors are transitioning to the alternative investment market?

‍

Why Traditional Investments Are No Longer a Smart Investment? 

‍

The alternative investment market is a significant departure from traditional investment strategies. Historically, stocks, bonds, and cash largely shaped the investment landscape. 

‍

A key milestone in developing alternative investments was the 1852 funding of the Transcontinental Railroad, which laid the groundwork for large-scale infrastructure investments. Over the years, individual and institutional investors favored stocks and bonds as the dominant investment vehicles. However, as global economies evolve and technology advances, new opportunities have emerged, prompting a rethinking of how people approach wealth-building.

‍

Young investors are transitioning away from the alternative investment market for several reasons: 

‍

• Skepticism toward traditional models: Younger investors, mainly Gen Z and millennials, are changing their views on wealth-building by moving away from traditional investments, such as stocks and bonds. Many view these conventional strategies as outdated and ill-equipped to deliver the high returns required to change in today’s dynamic and fast-evolving financial landscape. Traditional investments are often criticized for their rigidity and inability to adapt to the rapid pace of economic and technological change, making them less effective in seizing opportunities within emerging markets and industries. 

‍

These generations gravitate toward innovative and value-driven investment options, including social impact initiatives, cryptocurrencies, and tech startups. These choices reflect their comfort with technology, adaptability to change, and preference for investments that align with their values and long-term vision. 

‍

By prioritizing flexibility, innovation, and the potential for meaningful impact, they embrace strategies beyond financial growth to reflect their aspirations and societal goals. In a world shaped by uncertainty and disruption, traditional investments are increasingly seen as insufficiently responsive to the demands of modern investors, making alternative approaches more appealing and effective.

‍

• Higher risk tolerance: Gen Z and millennials demonstrate a notable willingness to embrace risk in their investment strategies. They understand that higher returns on investment (ROIs) often come with more significant opportunities. They view risk as a way to take charge of their financial futures, mainly when traditional assets, like stocks or bonds, often offer slow, incremental growth and are subject to economic stagnation or market volatility. 

‍

Having grown up in a digital age characterized by rapid change, these generations are naturally adaptable and comfortable navigating uncertainty. This adaptability fuels their confidence in exploring unconventional assets as they recognize that traditional investment methods may no longer keep pace with the evolving financial landscape. As a result, they are eager to seize opportunities that offer higher potential for growth and returns.

‍

What Is the Alternative Investment Market in the US?

‍

Alternative investments present a dynamic market for those seeking diversification beyond traditional stocks and bonds. While private equity, private debt, hedge funds, commodities, and collectibles offer unique advantages, they often come with substantial risks, such as illiquidity, high fees, and market volatility. These pitfalls can make navigating the alternative investment space challenging for new and seasoned investors.

‍

In contrast, CRE stands out as a compelling alternative, particularly for its ability to generate steady income, hedge against inflation, and provide long-term appreciation. CRE combines stability and growth potential with consistent cash flows from rental income and the added benefit of tangible asset ownership. It also offers recession resilience through asset classes like multifamily and medical office buildings, which maintain high demand even during economic downturns​​​.

‍

By focusing on a diversified portfolio across recession-resistant asset classes, investors can leverage the advantages of CRE while avoiding many of the uncertainties inherent in other alternative investments. Alliance CGC’s expertise and exclusive access to high-yield opportunities make it a trusted partner for those looking to navigate this lucrative market confidently​​​.

‍

How Young Investors Build Their Wealth Today

‍

Millennials and Gen Z are reassessing their long-term investment strategies, expressing reservations about traditional assets like stocks and bonds. Many are increasingly doubtful, feeling that these conventional investment options no longer offer the solid returns they expect.

‍

A Bank of America study revealed that more than 70% of investors aged 21 to 43 believe they cannot achieve above-average returns by relying solely on stocks and bonds. Alternative investments may provide the higher returns they seek. Chartered Financial Analyst Anna Yen explained, "The current generation's mindset has shifted. They have become more skeptical of traditional investments due to their lower returns. This skepticism has led them to consider alternative investment opportunities." 

‍

Young investors have various avenues to build wealth in CRE today. However, a solid understanding of the real estate market and its principles is essential: 

‍

• Educating oneself to gain a comprehensive understanding of real estate principles, market dynamics, and financial metrics is crucial. This can provide valuable insights that equip investors with the knowledge to make informed decisions. 
• Leveraging financing options is a key strategy for scaling investments without requiring substantial upfront capital. Government-backed lending on multifamily assets will significantly increase in 2024, making the current lending environment ideal for young investors who want to capitalize on favorable terms.
• Engaging in value-added strategies, such as property renovations and improved management, can significantly increase a property's value and profitability. Investors who actively manage and upgrade their properties often see higher returns than those who do not.

‍

By combining education, innovative financing, and value-creation tactics, young investors can establish a strong foundation for building long-term wealth in commercial real estate.

‍

Why CRE Is The Most Reliable Asset Class?

‍

CRE is one of the most dependable and profitable asset classes. It combines reliable income generation with long-term value appreciation. Here are reasons why CRE stands out as an asset class that continues to deliver stability, income, and growth.

‍

Consistent Cash Flow

CRE properties, such as multifamily properties, medical offices, retail centers, and industrial spaces, typically offer steady rental income. For instance, a retail strip mall with established tenants — like grocery stores or restaurants — can provide a reliable stream of revenue month after month. This predictable cash flow is a key advantage for investors seeking portfolio stability.

‍

Long-Term Appreciation

One of the most attractive features of CRE is its potential for value appreciation. For example, properties in growing urban areas may see substantial value increases over time. Consider a warehouse purchased for $500,000 in a developing neighborhood; over a decade, the value might rise to $800,000 due to the economic growth and increased demand for industrial space in that area. Historical data has shown that commercial real estate typically experiences steady value growth, with average annual appreciation rates of around 5% in recent years.

‍

Tax Advantages

CRE investments offer notable tax benefits, mainly through depreciation. Depreciation allows investors to deduct a portion of a property’s value over time, reducing taxable income and enhancing after-tax returns. For example, property owners may deduct $50,000 annually in depreciation, lowering their taxable income and increasing overall profitability.

‍

Hedge Against Inflation

CRE is an effective hedge against inflation because many commercial leases include clauses that adjust rent based on inflation. Typically, rental rates may increase by 2%-3% annually, ensuring income from leases keeps pace with inflation trends. This makes CRE a valuable asset during economic uncertainty and inflationary pressures.

‍

Portfolio Diversification

One of the significant benefits of CRE is its ability to diversify investment portfolios. CRE often correlates poorly with traditional stock markets, providing stability when equity markets experience volatility. For example, while the Standard and Poor (S&P) 500 experienced significant declines during the 2008 financial crisis, well-managed multifamily residential properties continued to generate consistent cash flow. This stability can be desirable to investors looking to reduce portfolio risk.

‍

Market Trends and Future Outlook

Despite challenges the CRE sector faces, such as rising interest rates and oversupply in specific markets, there is a sense of cautious optimism for 2025. Many industry experts expect conditions to improve, driven by capital availability and a rebound in property prices. According to recent surveys, many investors are confident that CRE fundamentals will stabilize shortly, offering new growth opportunities.

‍

CRE continues to be a highly valuable asset class. It offers a unique combination of steady income, potential for appreciation, tax benefits, and portfolio diversification. Its reliability and potential make it essential for investors looking to build wealth over time.

‍

Explore Alternative Investment Paths With the Right Partner

As generations change their views on how to be wealthy, how we approach making money must also adapt. Traditional investment strategies may no longer be as effective in a fast-paced, innovation-driven economy. The rise of new technologies, market shifts, and global trends presents unique opportunities for those willing to think outside the box. In today’s world, innovative, forward-thinking investments are the key to securing long-term financial success.

‍

At Alliance CGC, we specialize in providing investors with strategic commercial real estate (CRE) opportunities designed to deliver consistent returns. From multifamily, retail, and medical office buildings to veterinary, retail, and industrial properties, we focus on recession-resistant assets that enhance portfolio stability while driving growth.

‍

Our hands-on approach ensures every investment is optimized, leveraging billions in assets purchased and managed with a proven 28% historical internal rate of return (IRR). With Alliance, you're not just investing — you’re securing your financial future with opportunities in today’s most reliable CRE markets.

‍

Are you ready to explore the power of diversification? Click here to connect with Alliance and unlock strategic investment options today.