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3 Reasons Millennials and Gen Z are Turning to Self-Directed IRAs

Self-Directed IRAs are becoming more popular with younger generations. Find out why in this article.

Posted on April 22, 2022

gen z

A big shift in the investing world is coming. As younger generations begin inheriting family wealth, more and more of the millennial generation, those born between 1981 and 1996, understand the importance of growing their money and saving for their financial future. According to the U.S. Census Bureau, there are 77.12 million millennials in the U.S., making up 23.6% of the overall population. The millennials and Gen Z, those born between 1997 and 2012, hold more economic power than any generation that came before them. They earn more, save more, and even invest earlier. According to, 31% of millennials started investing before age 21, compared to 23% of previous generations.

Millennials are also the largest workforce in U.S. history, earning money for today and for retirement. Add the transfer of tens of trillions of dollars through inheritance, which is already underway, and this powerful generation is ready to take back the control of their finances. And that is where Self-Directed IRAs (SDIRA) come in. With the freedom and opportunities Self-Directed IRAs offer, younger generations are seeing the benefits of these accounts, and here's why.

1. Eager to Learn

As technology increases, it becomes easier and easier to access education and information from multiple different sources. Forum sites allow for discussions of topics with other people who share similar interests. These conversations can lead to even more desire to discover and learn. In the past, SDIRAs were not very well known, but the popularity of these accounts has significantly increased over the past 30 years. With more millennial investors discovering SDIRAs and their benefits, they are learning that it may be easier than they thought to move away from the traditional investing methods they were taught. Also, millennials have grown up with technology, so they are comfortable using online platforms. Since Self-Directed IRAs are typically managed online, this appeals to a tech-savvy generation of investors.

2. Perspective Shift

As millennials and Gen Z live through different situations, there continues to be a shift in the way they view financial security. Millennials have seen the struggles of their parents, watching them live paycheck to paycheck and invest their money the traditional approach. They are seeing that the cookie-cutter methods and investment strategies of the past simply weren't working anymore. New investment outlets – like cryptocurrency, real estate, private placements, and oil and gas – were providing better rewards. The ability to invest into these alternative assets became much more in demand.While alternative investments typically have higher minimum investment requirements, they have potential for much higher returns. These investments attract millennial investors as a way to:

  • Diversify their portfolios
  • Potentially earn higher returns than traditional investments
  • Mitigate risk in an economic downturn with investments not tied to the stock market

3. Take Back Control

The most common reason Gen Z and millennial investors are turning to SDIRAs is control. Self-Directed IRAs truly put the control back into the hands of the investor. Investing vehicles like Traditional IRAs and Roth accounts at traditional custodians limit the investment choices to stocks, bonds, mutual funds, etc. Usually, those investments are sold by financial advisors, but Self-Directed IRAs are different.  They allow the investor to find an investment of their choosing, and then tell their representative where to invest the money – a strategy younger generations prefer. When younger investors asked if they would ever choose to work with the same financial advisor as their parents, 88% responded saying they would never even consider it. Millennials and Gen Z are ready to take back the control of their money and look for investment opportunities they know and understand.

Also, millennial investors are more interested in social impact investing. According to, 77% of affluent millennials, compared to 30% of affluent baby boomers, invest in alternative investments that align with their values. For example, they can invest in small businesses that promote eco-friendly products or purchase real estate in a lower income neighborhood to try to revitalize the local economy. Millennial investors want to make a difference in their communities, and SDIRAs give them this opportunity, while also helping them save for retirement and meet their financial goals.

It's never too early to start growing your retirement nest egg. When investing in a vehicle that is comfortable to you, you can grow your wealth faster and greater. Though we've only listed just a few reasons, the benefits are endless. If you ever have questions about how to get started with a Self-Directed retirement account at Quest, call us at 855-FUN-IRAs or schedule a free consultation with an IRA Specialist HERE.

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