Many graduates back in ‘07 and ‘08 experienced the economic recession first hand. The situation was harsh; fear of not getting a job at that time, people losing money on real estate or in stock investments and in some cases, individuals were left homeless. The first real exposure to the market as graduated adults entering the working environment must have been very negative and caused fear, even panic.
For others it can be very intimidating to throw money into investments like stocks or cryptocurrency, however, it’s vital that you build a solid foundation to retire on.
Whatever the case, whether you’re an individual that suffered economic losses in the past or an amateur investor, removing the fear factor and investing now is important in order to build a stable financial future for you and your family.
How do millennials overcome their fear of investing for a solid future? Consider the following tips.
A good way to overcome your fear is by investing in yourself and one way to do this is by putting money aside for your retirement now.
Whether it’s €20, €50 or €100, make it a habit to pay yourself first, either by using retirement plans created by a company that you work for or by saving it yourself through your basic wage.
If you get paid weekly or monthly, ensure that a portion of that is put away in a separate bank account, perhaps held at a different bank. Setting up an automatic or passive transfer from the savings account into an investment or retirement account is a great way to utilize this strategy and help you build a good foundation for the future.
In the USA, jobs offer what they call a 401K retirement plan which is sponsored by employers. In other countries, it’s called differently but the concept is usually the same. This plan enables workers to save and invest a piece of their wage before taxes are taken out.
Taking advantage of these plans is vital, so employees should find out what their maximum match is so they can set their savings to the same amount, as to not miss out on “free” money. So if an employer matches up to 5%, then you should contribute 5% from each pay period also.
Individuals who have made investments in stocks or cryptocurrencies have made the mistake of selling as soon as the value of their investment has declined. No one knows what the future holds and investments that have higher short-term volatility risks, usually have higher returns long term. For example, Bitcoin back in August 2017 was valued at around $4,000 and by December 2017 the price surged to around $19,700 to reach its all-time high.
Another way for millennials to overcome their fear of investing is by ensuring they are invested in a diversified portfolio including bonds.
Bonds offer portfolio protection when stock markets take a dive, so avoid putting all your money into equities if you are risk intolerant.
The thing that scares most investors is volatility, even though it’s temporary. It’s important to understand that this is the price investors pay to see higher returns than stocks.
Not too late for Millennials
It’s not too late to start investing. Millennials have at least 25 more years to invest before they go into retirement.
According to Investopedia,
The best day to start investing was yesterday, the next best day is today.
A good way to start and make up for lost time due to the various circumstances is by removing unnecessary expenses, like weekly take-aways or new clothing. Using that money on investing in something profitable will take you a long way.
Consider increasing your job’s retirement plan or contribution plan and that will prove to be an important move for your future plans.
If you are a millennial, know that you still have time to make up for the time lost if you start investing now.