Stock Investing for Millennials
Millennials are more likely than other generations to be risk-averse.
They hold 52% of their savings in cash and only 28% in stocks, according to a UBS study. For other generations, the weightings are nearly the reverse: 23% in cash and 46% in stocks.
A 2013 Accenture report found that 43% of Millennials identify as conservative investors, whereas just 27% of Gen Xers and 31% of Boomers do.
And 43% said they would never be comfortable investing in the stock market, in a MFS Investment Management study.
Invest Aggressively Now
But investing conservatively — or investing very little and holding your money in cash — runs counter to conventional investment advice for the young, which says, invest aggressively now, while your long time horizon will allow you to recover from any losses, so you can reap the compounding benefits of growth.
If you’re a gun-shy Millennial investor or a risk-averse investor of any age, learn how to try out stock investing without getting burned.
5 Tips for Stock Investing
1. Learn about the various types of investments.
2. Invest in a broadly diversified portfolio of low-cost ETFs (exchange traded funds) and index funds.
3. Don’t try to beat the market; participate in it.
4. If you want to try investing in stocks, set aside a small percentage of your portfolio — and be willing to lose it all.
5. To mitigate the risk even further, look into Motif Investing.