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3 Mistakes Millennial Investors Make

Becoming an investor while you are still young is an advisable step towards preparing for the future and retirement. But investing can be tricky and many young millennials are finding it difficult to begin putting money away. Elements such as loans and little economic growth within the workforce create financial strain for young adults which could hinder them in thinking about their future retirement. These elements coupled with the following three common investment mistakes are factors which could greatly hinder young peoples’ financial future.

1. Not Having a Good Understanding of the Market

college student readingBefore you consider investing in anything, it is important to know the basic facts. The saying “Knowledge is Power” could not be more true when it comes to investments. Doing your research now could help you avoid mistakes which may not show up until later. In order to know which investment is right for you and your future desires, it is vital to understand the different aspects of the market such as stocks and bonds. Each of these are designed differently and should be chosen carefully depending on the goals you have for your life.
Additionally, it is important young people do research into things such as the asset’s performances and the fees which go along with it. It is important to look at the fee percentage not only based upon what it will cost you now, but what it could potentially cost when your investment is larger. Neglecting to do research now could result in you paying higher fees once your investments grow.

girl playing it safe22. Playing it Too Safe

The Great Recession resulted in significant loss for many investors. But those who lost their investments were not the only ones impacted; millennials were and are still affected by the recession. Because young adults saw their parents lose their investments when the economy plummeted, many are now afraid to put much value on investments. In their minds, it seems like a great gamble at which you could easily lose. According to a 2014 report only 5% of millennials are in favor of an aggressive approach in the realm of investing. It was discovered that over a third of young adults prefer to take a conservative or somewhat conservative strategy. While this may seem like a safe road to take, it does result in their chances of high earnings being diminished greatly.

3. Deciding to Forgo Investing

The media has often labeled millennials as “super savers.” However, a recent survey from Wells Fargo has proved just the opposite. It was discovered that 45% of young adults have yet to begin investing for the future and have delayed making plans for their retirement. This is largely due to the fact that many are attempting to pay off student loans before beginning the investment process. Although it is a good idea to pay off loans quickly, the delay in investing could potentially hurt millennials in the future.

Take it One Step at a Time

what to do2Many believe that in order to invest successfully, one must have the means by which to sink thousands of dollars into stocks and bonds at one time. Nevertheless, small investing over a period of time can result in great success. By investing $25 per pay period into your researched investment, you are taking the perfect step towards long-term financial security. Additionally, you can also make it your goal to increase your investment contribution by a particular percentage on a monthly, quarterly, or yearly basis. Simple steps like this may not seem like much in the beginning; however, steady investment over time may result in benefits that will be yours in the future.

Investing involves risk including loss of principal. No strategy assures success or protects against loss. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

Article provided by smartasset.com. Original article may be located here.

Posted in : Financial Planning, Investment, Personal Finanance