Even though millennials may be financially preparing themselves for retirement, the fact remains that they could be leaving some great opportunities on the table. Putting money into a retirement account is definitely the way to go, but investing in the stock market is an even better move, especially for the younger generation.
Embrace the Fear
One of the biggest reasons millennials (along with members of older generations) don’t invest in the stock market is that they’re afraid of losing money that would fare better in a savings account. If one were to gather insights from professional investors, it would become plain to see that investing in the market long term is an ideal way to see returns on any money put into a retirement portfolio. The stock market is undoubtedly volatile, but the keys to success are patience and focusing on the end of the road rather than the beginning.
Something else to bear in mind is that younger investors are in a prime position to ride out the regular ups and downs of the market. Holding onto stocks for as long as possible and allowing investments to grow is an ideal strategy for planning for retirement.
Inflation Can Lead to Deflation
An investment adviser’s analysis is likely to consider the overall impact of inflation. What that means for millennials is that funds socked away in their retirement savings accounts won’t retain the same buying power over the decades. By failing to keep up with the most current value of currency, a once-promising retirement plan can quickly sour.
Work for Employers Who Offer Stock Options
Besides a company that offers health insurance and paid vacation, millennial employees should also ask about stock options while considering job offers. Such options allow employees to take a piece of the company equity pie, which can pay off if the company manages to flourish over the years. Something else to think about with companies that offer stock options is the fact that employers aren’t obligated to work for the organization for 30 years before they can sell their stocks for cash, which they can then reinvest in a retirement portfolio account.
As they seek out investment opportunities and help from investment managers, young investors should focus on both individual stocks that are poised to grow over time as well as stocks that offer dividends, which are a bit like interest that companies award shareholders. The key to truly maximizing dividends is to utilize the Dividend Reinvestment Program, also known as DRIP, which puts the dividends right back into the awarding company for a glorious financial snowball effect. Not only is this financial move a great way to see an investment grow faster over the long term, it’s also practically free investment money.
Increase Investing Opportunities With Supplemental Income
Even if millennials realize the importance of investing for retirement, many of them don’t have the extra funds to invest as much as they may like. Thankfully, it’s easier than ever to make extra money. Driving for a ridesharing service or delivering groceries are two easy and effective methods of supplementing one’s income, and best of all is the fact that independent contractors for such companies can make their own schedules.
Employees can outsource their professional skills to other companies and individuals on the side, which is both a good way to supplement an income and learn new skills that can be put to good use with their main employer. Millennials should also look to their main employer for opportunities to make more money that they can invest, either by working towards a promotion or by asking about a company 401(k) program that includes employer matching.
The younger generation won’t be young for their entire lives. That’s why it’s so vital that they start thinking about their retirement while they’re able-bodied and have plenty of opportunities to explore. Investing can seem intimidating, but when done right, it can also be quite satisfying.