Tip #1: Start Investing – The Time To Invest Is Now

 Millennials, here is the best advice you can get: “Buy low and sell high.”  Okay, I’m being facetious, but we are in the middle of the biggest sell off in years, and it is a perfect time to put a toe-in-the-water and start investing. The sky is not falling. This is a correction, mostly due to China’s economic slowdown and fears over climbing interest rates. The truth is that our economy is really recovering and the U.S. remains strong and sound. 

Tip #2: The Miracle Money Can’t Buy – Time

Millennials, you are young and you have time on your side. Even genius, Albert Einstein, is quoted to have said, “Compound interest is the eighth wonder of the world.  He who understands it, earns it…he who doesn’t…pays it.”

“During the 20th century the stock market returned an average of 10.4% a year.  Just $1,000 invested in 1900 would be worth over $19.8 million by the end of 1999.  At a 15% average return per year, it only takes 30 years to turn $15,000 to $1 million.” I’m not saying that we will average 10% returns, but we may.  Millennials, suppose you wanted to start to save now for that new home.  The US average sales price for a new home on July 31, 2015 was $361,600.  That means that the 20% down payment you would probably need is $72,320.  If you invested $160 a week for 7 years and that compounded annually at 7%, according to Bankrate’s calculator, before taxes, you would earn $74,542. The real miracle comes in if you increased the return to 8% and did the same $160 a week, but for 30 years, that’s where you approach the $1,000,000 mark.

 

Tip #3: Buy What You Know

You know what clothes and shoes you wear, you know what electronics you use, you know what you eat, and you know what media you watch and follow.  Those should be your picks for investing.  This is not a new philosophy.  Peter Lynch professed this and it helped to guide Fidelity’s Magellan Fund from 1977 to 1990, during which time the Funds’ assets grew from $20 million to $14 billion. More recently, investment great, Chuck Carnevale basically professes the same philosophy.  I suggest that parents, when they first introduce their young children to the world of investing, take their kids on a walk through the grocery store and start to talk about the products they buy and why.

Millennials, just take a stroll through the grocery store of your life and you can figure out your own portfolio. The key is to buy and hold your stock regardless of what news you hear in the media and what “great advice” your roommate gives you about a “hot tip.”  Stay your course, make weekly investing a habit and you should do fine.

Tip #4: Make It Simple

The Goldman Sachs survey further revealed that, “About 43 percent of the survey participants said they wouldn’t spend more than an hour getting guidance on an investment, while 13 percent of them said they wouldn’t seek out advice at all.” According to Capital One Investing, in the CNNMoney report, “… young investors are more likely to go it alone when it comes to investing. Eighty-seven percent of millennials say they trust themselves to make investing decisions on their own compared with 68% of seniors.”

You are the mobile generation and there are online and mobile investing platforms that are easy to use and low cost. I work with a company called DriveWealth. They are a broker-dealer who gives low cost access and education to Millennials, who want to get started investing in the stock market. You get to make your own investment decisions.