Understanding where millennials should invest their money can help you to make intelligent investment decisions as well. While you may think that this generation would follow in the footsteps of their investment-conscious ancestors, this is not the case at all. Millennials have the unique perspective of having experienced two major stock market corrections very early in life. Even those who were too young to have actually lost money themselves in these corrections know people who have. Because they witnessed this at a young, formative age, it left a lasting mark. They have seen the financial loss and misery associated with the immediate vanishing of great wealth almost overnight. and they want to make better financial decisions than their older counterparts.
Therefore, as a generation, they may be more timid or reserved about investments than their parents and grandparents, and they may strive to create more diversified portfolios across a wide range of investment options. At a time in life when they should feel freer to make riskier and perhaps more lucrative investments, they generally take a safer road at the risk of limited account growth.
With this in mind, you may be curious about where should millennials invest at this stage in life. By learning more about millennial investing trends, you can better determine where you may want to invest your funds now and in the years to come.
Mutual Funds
While stocks in general are often viewed by millennials as being risky, many millennials are finding comfort in the stock market through the use of mutual funds. For example, index funds or broad industry funds provide millennials with a great way to profit from the growth in the stock market while mitigating risk. This is because a mutual fund pools money from many investors together to purchase a wide range of stocks. Because exposure to any single stock is limited, the risk of financial loss is reduced. This risk is even more well-mitigated when individual millennials purchase multiple mutual funds with their investment proceeds rather than just one fund.
Forex Trading
This is a generation that thrives on instant gratification, and forex trades often satisfy this need. When you look at online forex trading for beginners, you will see that these trades are executed quickly, and the trades are based on currency pairs. Many millennials can actively monitor world events with ease through their technological devices, and they use their knowledge of world events to make savvy forex trading decisions.
Choosing VPS for forex trading is a thoughtful way to get the ball rolling on this type of investment activity when you have minimal background knowledge in it. Forex trading is not without risks, but millennials may feel more comfortable taking these financial risks because of the responsive nature of these investments and because the forex market is open 24-hours per day for immediate results from their investment decisions.
Mobile Investing Apps
Despite the fact that some millennials want to stay out of the stock market altogether, some are taking a more hands-on approach to investing in the market with baby steps. Some mobile trading apps are available that enable tech-savvy millennials to make trades free of charge through an app on their smartphone. These apps may have limited research features available, but they are viewed as more responsive and more cost-effective than working with a traditional brokerage firm. Some millennials find comfort in knowing that their investments are completely under their control from these apps and that they do not have to be tied to a physical computer to conduct trades.
Many millennials who make stock purchases do so with social awareness. While they want to make money from their stock purchases, they may also be concerned with child labor, the environment, fair wages for both sexes and other causes that are meaningful to them. In this way, some millennials are using their investments to make a positive difference in the world around them.
Employer Retirement Plans
When you ask where should millennials invest, an employer-sponsored retirement plan is a clear answer that ranks at the top of the list.
Most medium and larger employers offer a retirement plan, and these are often tax-advantageous plans that give you employer-matching contributions. These funds may have three to four decades to grow undisturbed, and the result is that many millennials may be millionaires several times over by retirement age if they simply invest in these accounts starting at a young age.
Some have plans to retire well before retirement age, so it may also be necessary to fund investment accounts beyond a traditional retirement account. However, not taking advantage of free money from employer contributions and tax savings offered by these investments can be a foolish error for young adults to make. While not all millennials take advantage of retirement plans, this is an area where they should be investing their funds for maximum gains over the years.
Many millennials have a forward-thinking approach to managing their finances, and many actively manage their funds very responsibly. Some live conservatively in an effort to keep debt balances as low as possible while contributing as much as possible to investments. This approach combined with the right mix of investments can set millennials up to enjoy a secure financial future in the decades to come.
