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Millennial Money Mission:

Millennial Fear of Investing – Where do I start?

Millennials face one of the most uncertain economic futures of any generation since the Great Depression. Many Millennials came of age or entered the workforce during the Great Recession, and as a result have started their careers at lower salaries or not in their preferred field of work. Compound this with the fact that Millennials carry more debt in the form of student loans than any prior generation, and it’s easy to see why some (not all) might be nervous about putting their hard earned savings into an investment that carries any degree of risk. However, not investing while time is on your side could make for a difficult road to retirement. Below are the top three myths Millennials need to stop believing about investing for their future selves. 

Myth 1: I don’t have enough money to start investing.

“The journey of a thousand miles begins with a single step.” (Lao Tsu, Chinese Philosopher)

Can you put aside $5 a week? $10 a week? Then congratulations! You have enough money to start investing for your future goals, whether that includes a home, wedding, or more flexible lifestyle. You might be able to find even more to invest by taking a look at your budget. (Don’t have a budget? Check out our Millennial Money Mission post on how to budget for your necessities and build up an emergency fund.)

There are many brokerage firms and trading platforms available to you with no minimum deposit required. These firms often offer investment options with low or no commissions or management fees. Many of these firms also offer investing apps for your smartphone. For more information on these apps, please see Millennial Money Mission post on [smartphone investing apps]. If you think $5 a week is too little, remember, compound interest and time are on your side, no matter how small you start (for more on the magic of compounding and time, check out Millennial Money Mission post on Compound Interest). Remember, before placing your money with any broker-dealer, make sure they are registered by checking BrokerCheck or by contacting your  state or provincial securities regulator.

Take Action: 

Automate your investing. If you’re paid bi-weekly and have $20 deducted from your paycheck before it hits your bank account, you’ll have over $500 to invest over the course of the year, and you won’t miss it because you won’t see it. If your employer offers a 401(k) or Registered Retirement Savings Plan (RRSP) or pension, invest in it, even if it’s a small amount. You won’t miss 1% of your paycheck if you never “see” it.

Myth 2: I don’t know enough about investing – I have no idea which stock to pick.

“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” (Warren Buffett)

You don’t have to pick stocks if you don’t feel comfortable researching the financial health and history of individual companies. There are many investment products that enable you to invest in broad sectors of the market with little or no fees. These products allow you to diversify and spread your risk out over several different companies and economic sectors, rather than putting all your money in one company’s stock.

If you need help building a portfolio, you can also enlist the assistance of a robo-adviser or consult a financial professional after checking to ensure they’re appropriately registered. Check the SEC’s Investment Adviser Public Disclosure database or FINRA’s BrokerCheck. In Canada, use the National Registration Search. For more information, please see NASAA’s alert on Robo-Advisers. Additionally, many financial planners, investment advisers, and brokers are willing to work with clients who are just starting out on their investing journey and may not have accumulated many investable assets yet. In a way, time is on the financial professional’s side by working with younger clients whose investments will enjoy the benefit of compounding value over time.

Take Action:

Educate Yourself. Go retro and check out your local library or contact your state or provincial securities regulator for educational materials on investing. (To identify your state or provincial securities regulator, please click here.) You may also start by researching lower cost financial professionals in your area or who are willing to work with you remotely on your investment goals. Always check to make sure the financial professional is appropriately registered in your state or province. For more information, see our overview of the different types of financial professionals.

Myth 3: I’m afraid of losing all my money.

“When you invest, you are buying a day that you don’t have to work.” (Aya Laraya)

You can’t deny that it was scary when the US stock market lost half of its value in 2008. However, that’s not the end of the story – by 2012, the market was back on track and trending upward. While there is always a risk of losing money when investing, leaving your money in a savings account is almost a guarantee that you will lose some of the value of your money to inflation. As Robert Allen once said, “How many millionaires do you know who have become wealthy by investing in savings accounts?” The answer to that rhetorical question, is none.

Take Action:

Get some perspective. Look at the data on market performance over the long term (10, 20, and 30 years). Understand that while there are fluctuations, in general, the market has trended up over the long term. Consider the timeframe for your investment goals – when do you hope to retire, or semi-retire and pursue your own hobbies or interests full time? 

Don’t get hung up on the sensationalized news on social media or 24-hour news shows. It’s important you don’t make your investment decisions based on sources that offer dramatic, sensationalized spins on the latest market dip or the hottest new IPO.

Bottom Line

We can’t say it enough – right now time is on your side, but with each day that passes, it’s a little less on your side. If you remember any of the following, you need to be investing for your future:

  • Playing Oregon Trail in Computer Lab Class. (We all died from dysentery at some point!)
  • Facebook when it required a college email address to sign up.
  • What you thought was your favorite N*Sync song turned out to be Limp Bizkit.
  • Total Request Live with Carson Daly.
  • Princess Diana Beanie Baby Bears
  • Blockbuster Video.
  • AIM (AOL Instant Messenger).
  • Burning Mix CDs for your best friends or romantic interest.
  • Floppy Disks.
  • Dial up internet.
  • Getting DVDs in the mail from Netflix.
  • Twilight

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