When you are young, saving for something that is years away, may not appear important or significant. But it is precisely when you ought to start saving. Money invested for long-term gets more time to grow. One of the ways to give your money an opportunity to grow is by investing in the stock market. As youngsters, we have a higher risk tolerance and a lot more time to invest, even in case something goes wrong. And higher the risk of any kind of investment, usually, greater the probability of return.
If you think stock investments are too risky, you may consider ETFs , Bonds, Mutual Funds or other securities, based on your risk profile.
Investing in stocks could be a very smart idea. Or putting it another way, it’s a way to create wealth and, if done right, can be relatively easy, painless, quick and the rewards are plentiful. What else can a millennial need!
Regardless of whether you are starting from scratch or a couple of thousand dollars, investing early will help you set yourself up for long-term returns. While some youngsters may think it’s cool to possess a number of stocks having the right stocks is obviously more important. That said, as the variety of stocks in your portfolio increases, your risks tend to reduce. This is called diversification.
Most of us fear downturns. True, a downturn in a market makes the short-term scenario risky,. and it might be torturous for a specific period of time, but with patience, you should be able to ride it out. If you’re really thinking about selling your stocks when they are down, advise yourself that you are investing for the long term. Just as the whole market falls sometimes, the whole market rises as well.
In fact, if you save regularly and continue to invest during bear markets or when the stock market is falling, you are basically adding to your savings . And later, when the market recovers, you’re likely to see your value grow on its own.
In fact, as the chart below shows, what looked like some of the worst times to be in the stock market actually turned out to be the best times.
Moreover, if you are investing for a longer term, buying stocks in a bear market would be a great strategy because you are buying it at much lower prices. Once the market recovers, you would be in a position to make yourself a good amount of gains.
So the sooner you get into stock investments, the more you get out of it!
This is a millennial post – an effort to give our younger audience a chance to express themselves on the Stockal Blog.