Millennials, of which I am one, are generally considered to have been born between the early 1980s and mid-1990s. My generation has often been characterized as financially cautious, especially since many of us were graduating college and looking for our first “real” jobs right around the time of the 2008-2009 Great Financial Crisis, and found it difficult to get our careers going during the subsequent recession and economic downturn. Then, right as many were finally getting traction with their careers, the Covid-19 global pandemic hit, which upended much more than just careers and financial goals.
According to an article from Yahoo!Finance, this has led to just 30% of millennials investing in the stock market, compared to 51% of baby boomers.
However, I believe there are some major reasons why my generation should embrace investing in the stock market as a key component of our financial journey.
One of the greatest advantages millennials have is time. The power of compounding provides the potential of exponentially grow investments over the long term. As evidenced in the chart below, starting early, even with small amounts, the opportunity is there to amass wealth by the time most millennials would seek to retire. Waiting too long to invest might lead to missed opportunities to take advantage of this powerful financial concept.
Source: JP Morgan Guide to Retirement
The stock market, and investing in general, have proven to be an effective tool to combat inflation, which erodes the purchasing power of money over time. The chart below shows that simply relying on a savings account, which historically have paid minimal rates of interest, may not be sufficient to keep up inflation. Investing offers younger generations a better opportunity to grow and preserve wealth for their families over the years.
Finally, investing in the stock market typically aligns with long-term financial goals. Whether it's buying a home, funding a dream business venture, or planning for retirement, investing can provide the necessary funds to realize these aspirations.
Investing in the stock market is a vital step for millennials to secure their financial future. With the advantage of time, compounding returns, and the potential to combat inflation, the stock market presents an opportunity for long-term wealth-building. If you, a family member, friend, or loved one have questions about your specific financial situation, please feel free to reach out to our office- we would love the opportunity to talk and see how we can best serve you. It is what drives us as we continue "Moving Life Forward” together.
© 2023 Nathan Ollish
The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.