By the end of the decade, millennials—also known as Generation Y—are expected to be the largest and most diverse segment of the global human population. As adults in their mid-20s to early 30s, they are still in the phase of creating wealth, paying student loan debts, or establishing self-owned businesses.
Despite the unpredictable global economic environment, millennials are expected to increase their wealth dramatically in the coming years. Recent research by Deloitte found that about 54% of millennials in developed countries are planning to invest in stocks or have already started their own business. Meanwhile, 27% are self-employed entrepreneurs.
However, due to the 2007–2009 recession and the ramifications of the ever-volatile stock market, many remain reluctant and conservative to start investing in financial instruments. Stock trading seems a complicated and risky endeavor, and they still prefer the security of putting their money on savings, tangible assets, or even sit-in cash.
A Risky Business
Most millennials reason that they are still financially incapable of investing in the stock market. More often than not, other financial obligations keep individuals from taking the leap and starting to trade.
One such financial burden is student debt loans. Statistics so far this year shows that 44.5 million people in the United States racked up a staggering $1.5 trillion in student debt. On average, a graduating student owes some $37,000, an amount he or she could have used to start a business or invest in stocks.
Another killer is credit card debt. A US household, on average, owes a financial institution $8,398.
According to the study conducted by Ally Financial Inc., the perceived “right age” to start investing is at 28. Respondents have also stated that they must have an annual salary of over $35,000 and have at least $3,659 in savings to make the decision to invest.
Millennials Need To Invest In The Stock Market, And They Have To Do It Now
Contrary to common belief, not investing is riskier in the long haul.
Letting money sit in cash presents various risks of its own. As the time value of money takes effect, inflation poses the risk of depreciating, if not entirely losing, the potential purchasing power of money.
Investing in stocks helps in planning for an uncertain future, especially for millennials who, as early as now, are expressing apprehensiveness over their long-term and retirement plans.
The stock market provides real opportunities for growing money in the long term. Its high risk promises growth leverage and potential of high returns. Moreover, stock trading offers dividend income, diversification, and ownership. Dividend income can help fund future retirement or pay for even more investing as you grow your investment portfolio over time.
It Is Never Too Late To Invest
Investing is not only for the rich, nor is it only for the old. Now, more than ever, millennials must engage in learning about stock trading and optimize its potential. The stock market remains a lucrative and widely accessible platform for younger generations to start growing their money to prepare for the future.