5 Reasons Millennials Should Already Be Investing

Jamie Fleetwood Uncategorized Leave a Comment

Millennials

It’s no secret that many Millennials are struggling to make it financially. A majority of the bunch spend more than they make, are in severe debt, a bundle of them live with their parents, and a very few of them are investing – but they should be.

Millennials more than anyone need the money, and investment just might be the answer to helping these young folk find financial stability and freedom.

Here are the top 5 reasons why I think Millennials need to see the light and start investing :


1.) Millennials have the time

The big whammy and main thing that millennials have that predecessors didn’t, is time. Millennials are, obviously, younger than previous generations, leaving us a lot more time to get done what needs to get done. And thanks to that extra time, young people have the opportunity to take advantage of “The Power of Compounding”.

Compound interest is what makes investing potentially so profitable. Compound interest lets you earn interest on the money you save, and also on that interest the money earns. A small amount of money can add up overtime.

The Twenty-somethings also have time to weather any of the ups and downs of the market and benefit from the long-term gains. There’s a reason that time number one on this list, and that’s because the power of compounding is precisely why the sooner you start investing, the better.


2.) The tech-savvy generation

Millennials have another advantage on their side that previous generations still aren’t quite up to par with- they’re tech savvy. They know how to work those fancy gizmo gadgets and that internet machine like the back of their hands. And we know that the Internet is useful for much more than just YouTube videos and Facebook, which some of our predecessors have yet to figure out. There are many free tools on the Internet that can help you make better decisions about investing and provide financial education. Websites such as Investopedia make it easy for anyone to figure out what exactly P/E means. There is a plethora of resources online to help you gain a better understanding of investing.


 

3. Say hello to the generation of skeptics

Millennials have grown into the workplace in a time of economic strife… to say the least, so it’s no surprise that they are skeptics when it comes to that little thing called money.

Millennials are sure to be the most difficult to willingly partake in get-rich-quick schemes and overly risky investing. Millennials are to no surprise also skeptical of financial institutions. As they transition into adulthood, more than half of their generation says their parents were the most influential on developing the way they view money. In fact, when seeking investment advice, Millennials are most likely looking towards their parents – which can be good or bad.

Most millennials that are investing are playing it safe and they’re willing to admit it. Northwestern Mutual found that a third of them favor long-term strategies, and another third would like to as well, but they also feel like they are too far behind to take the slower route. High growth strategies lead to much greater long-term returns, and Millennials have 40 years to get over any bumps. The point is that young people should embrace the low-cost, diversified risk while they still have the time to ride it out.


4.) Something to counter student loan debt and underemployment

Compared to Generation X and Baby Boomers, millennials have less wealth and income at the same stage of their lives. Millennials suffer from unemployment, student debt, and underemployment. It’s no secret that Millennials haven’t all been getting the best results out of the education system, because of the 20 million Americans that choose to attend college each year, close to 12 million borrow annually to help cover costs.

However awful bad debt may be, to add on to the financial hardships for Millennials are due to facing underemployment. Millennials are taking on jobs that they are overqualified for just to make ends meet.


 

5. Retirement is far away… but not that far

Less than half of Millennials are saving for retirement. Yes, Millennials have got a few years before retirement becomes a true reality, but as we all know, time flies and retirement tends to creep up sooner than anticipated.  Millennials are well aware of the problems with Social Security, and a majority of them don’t expect it to be a significant income source when they retire. And with that, the uncertain fate of Social Security has resulted in millennials anticipating the need to be self-reliant when it comes to retirement.

Yes, all investments have a degree of risk. Money invested in securities is not federally insured. It’s important to understand that with the purchase of stocks, bonds and mutual funds that you could potentially lose your principal, or the amount you originally invested. But investing isn’t that different from life itself. With no risk comes no reward. If you keep your money under the mattress instead of investing it, your money will just sit there idly. Every day your money is invested is another day that your money is working for you.

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