It’s not been an easy ride for millennials over the last 10 or so years with the financial crash brought on by poor lending choices by the major banks and other financial institutions causing havoc and making people rethink their investment priorities.
It’s quite understandable if you were looking to invest in the stock market that you would have second thoughts and look to avoid as much risk as possible and put your money into a traditional savings account.
Yes, going down that road you would make some gains and be as far removed as possible from losing money despite low interest rates (though nothing is ever 100% guaranteed in the world of finance).
Yet it may be that you are missing out on a lot of money for your retirement by taking the traditional savings route when by investing in stocks you could have seen a considerable increase in your long-term retirement pot. It’s quite understandable that you and others in your position may be averse to too much risk given the market collapse in 2008, however, you might be missing out on effective ways to make your money grow.
Attitudes, however, may gradually be changing as the stock market continues to show significant gains over recent years. As ever, it comes down to your risk appetite for investing, but if you work to build up a portfolio that spreads the risk between safe, medium and high, then you’ll have a good spread of investments.
So you should explore stock investments for your retirement plans and if you’re new to the field do some research on how to invest in stocks to equip yourself with the right knowledge to become a successful investor.
There are many good reasons for you to initially dip your toe into investing in stocks and if you approach it with a clear plan – with professional advice if you need it – you could be well on the way to making more money than you had thought possible.
Here are five reasons why millennials should invest in stocks.
- Stocks are what make the financial world go round. Whether it’s secure government bonds that will give you a low return but are certain to give you your money back, standard utility companies that always provide dividends at some level or risky tech start-ups that could make huge amounts of money or not, there are always choices for your investments. You may not be able to keep track of everything yourself so get some advice and start investing.
2. You’re at a good stage for your investments to grow. The earlier you start and the more you can put in the more you are likely to gain. Compound interest is one of the best friends that younger investors can have so don’t put off investing until it’s too late to build that really significant nest egg.
3. Traditional savings plans are not particularly attractive. Sure, they are a safe place to put your money and you might want to leave some there as a hedge against a rainy day, however, set against the poor returns you’ll get with interest rates at an all-time low, then investing in stocks may be the best way forward for you.
4. Learn to keep an eye on the market so you can make informed decisions as to where to invest. As with any financial dealings there are swings and roundabouts and there’s little doubt that confidence was rocked during the crash. But stock markets around the world have gradually recovered are now posting healthy gains in many industry sectors. Take time to find out more, as a little knowledge can be a dangerous thing. You may not be an expert initially but there’s nothing to stop you from spotting market trends, understanding them and investing wisely.
5. Stock investing is different for different people and if you like taking risks for potentially greater returns then it could be the place for you. Most folks are not risk averse but generally want a bit of a safe haven if things in other areas go wrong. By spreading your risk in a diverse portfolio, you can protect yourself as well as benefit from your higher risk investments that are successful.
Plan for the future
Risks are taken by everyone every day and investing is no different. Develop a plan, do your research and talk to people who know the investment field. Then take the leap as early as you can and set yourself up for a bright financial future.