Solid Reasons for Millennials To Invest in the Stock Market
No matter a person’s age, it’s common to feel intimidated about investing in the stock market. That said, there is a lot to be gained by making the leap. Millennials, in particular, have a lot to gain by investing in the stock market, especially in terms of boosting their possibilities for retirement. An in-depth guide is a good place to gain a foundational understanding of the reasons to invest.
Not Investing Can Be Considered a Risk
Most millennials were old enough to understand what was happening during the real estate crash and the following recession. That means the age group has firsthand knowledge of the financial frustration that can crop up during a widespread crisis. Choosing not to invest in the stock market can be considered a risk because investing is a good way to allow money to grow over the years. The sooner a person starts investing, the bigger her or his investment can swell over time. True, the stock market can absolutely dip down into unsettling numbers, but it’s rare for the market to stay down for a long period of time. Long-term investments are most certainly the way to go.
People Live Longer
Even with Social Security and employer-sponsored retirement plans, there are no guarantees a person will have enough money to live off of comfortably. For that reason, it’s best to use as many means as possible to cover basic living expenses during retirement, as well as unexpected medical expenses common to senior citizens. At any age, there is a certain peace of mind that comes with having access to funds in case of an emergency, which can go a long way in relieving anxiety and depression.
Inflation Looms in the Distance
Inflation is another reason for millennials to start investing in the stock market. Purchasing power decreases over the years, meaning that what costs $10 today could cost $12 in 15 years. It’s best to keep up with (or get ahead of) inflation rather than fall behind.
The reason investing in the stock market is a good way to keep pace with inflation is that owning stocks gives a person ownership in a business. When inflation kicks in and increases the costs of goods, the companies that manufacture those goods see an increase in their overall value, which is great for investors.
Wages Aren’t Increasing
Unfortunately, companies aren’t increasing employee wages very much, which creates another hurdle for keeping up with inflation. This lack of a fair wage or salary can leave millennials missing out on an income they’ve rightfully earned. While investing in the stock market may not be able to make up for stagnant wages entirely, it can make life a bit easier later on. Also, millennials don’t have to feel as if they are left to the whims of companies that don’t pay employees what they are actually worth.
Apps Make It Easy
There are more apps than ever devoted to helping people invest in the stock market. Better yet, some apps can get users started for as little as $5. This is an especially great option for millennials who may want to invest in the stock market but have trouble finding the money to do so when they’ve taken care of all their other monthly bills and expenses.
Investing apps can also provide educational insights on how millennials can make the most of their investment and learn more about how the stock market works. Between the ease of use and additional information, a person can be relieved of much of the hesitation and anxiety associated with investing in the stock market.
Diversification Pays Off
Even if millennials have a savings account and bonds with a bank like GBTI, there’s still one more thing they can do to diversify their investments: invest in the stock market. A basic investment portfolio is made up of a mix of bonds, stocks and cash. By not having stocks, millennials are giving themselves fewer financial legs to stand on. For instance, bonds and cash may not be enough in the future, but stocks can help balance that out.
Dividends are Awesome
By owning stocks, millennials have the chance to claim a slice of the economy. When the economy does well and an owned stock does well right along with it, the value of the stock increases. When that happens, companies commonly give investors dividends, which is essentially free money that can be reinvested, all without the investor having to reach into her or his pocket. This is in direct contrast to only having a savings account or bond. With both, interest rates are fixed. While banks and bonds aren’t horrible investments, they pay out the same amount no matter how well the issuing company does over time.
The sooner millennials start investing in the stock market, the better. Plenty of free resources exist, making it easier to break down barriers and start reaping the benefits. After a while, millennials may ask themselves why they didn’t start investing sooner.