As it stands, the millennial demographic is larger than any other generation. Having said that, do they plan and save better for retirement than the other generations? Maybe, maybe not.
As millennials move into the critical earning years of their lives, it’s essential for them to save as much for retirement as possible. While it may be challenging to sock away a significant portion of your paycheck, investing wisely in the market could prove to be very beneficial in the long run.
But how?
Jason A. Sugarman suggests following the following three tips to investing in the right kinds of stocks.
Avoid Trends
Steering clear of fads will yield positive results. Just because you love snapchat, doesn’t mean you should throw all of your money into Snap Inc. We see way too often company’s stock diminishing after an IPO.
In order to avoid this pitfall, consider whether or not a company truly has potential for growth based on personnel and product advancement.
Let the Market Grow With Time
Sometimes, the best advice is to just “do nothing”. In this sense, investing in a mutual or index fund can yield some nice returns in the long-run. This may be a great option for millennials who really don’t have the time to monitor stocks and analyze the market.
It’s amazing how often an index fund will outperform a hand-picked hedge fund (not to mention the high fees that come with actively managed funds).
By removing the guesswork out of investing, indexing is a great way to go. You can also consider a target-dated fund, which rebalances your account automatically with age.
Early is Better than Later, More is Better than Less
As an investor, the biggest benefit that you can have on your side is time. When you’re young, you have leniency to take risks and suffer losses through the turbulence of the market. In regards to your retirement, risk really doesn’t matter that much due to the amount of time that you have on your side.
As history shows us, the stock market (over time) moves in a positive direction. We’re never going to have a 35 year recession. Unless we have some catastrophic event that ruins capitalism, you’re guaranteed to earn money in the long-run.
Investing in the stock market when you’re young is much akin to going shopping and buying something on sale. You’d purchase an item on sale even though you may not wear it until later, right? Millennials should look at stocks in the same light.
Recap
Sure, investing can be very tricky. Having said that, if you follow these three tips, you’ll be sure to have some nice earnings later in life. Get started today!
