Oct 23, 2014 Millennials and Their Money: 3 Tips for Overcoming Investing Fears
When it comes to Millennials—Americans ages 18 to 29—and their money, most have a sinking feeling that investing in the stock market is like boarding the Titanic. According to a recent Bankrate.com study cited by a recent The Street article, younger people prefer cash or cash equivalent investments. How can a young person get over his or her aversion to investing in the stock market?
Investing instead of trading
One way a young investor can get over their fear of losing money in the stock market is by taking a long-term approach. Trading stocks is not the same as investing in the market. Most of the horror stories of people who lost fortunes occurred because they “bet” money on a penny stock instead of “dollar cost averaging” into a particular stock position. Smart investors contribute a certain amount of money on a regular basis so that they build up shares in their account over time.
Getting an immediate reward
In our highly technical, consumer-driven world, younger people are often used to immediate gratification. By investing in stocks that pay dividends, young investors can feel rewarded more quickly. Most companies that pay dividends or share the profits with their shareholders of record, pay the dividends every quarter. Some pay sporadically or as they earn profits.
Diversifying from the start
When trying to figure out how to invest their money, most millennial’s become lost in the complexities of the market. The default for young investors often becomes a savings account or possibly certificate of deposits. But the market has many other options such as bonds, real estate, commodities, futures, options, and precious metals such as gold. You can hold dividend-paying investments within a 401(k), Roth IRA or many other retirement or regular investment accounts.
Sitting on cash is the equivalent of putting gold under the mattress or burying it in your backyard. Millennials are too smart not to find better ways to invest their money.
Investing involves risk including loss of principal. no strategy assures success or protects against loss.
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Market Update: February 2023