A study conducted by BlackRock found that nearly half of all millennials think that investing is “too risky”. This fear of risk is understandable. Most millennials remember the devastating impact that the 2008 financial crisis had on the stock markets. No one likes to lose money, but if it is fear that is keeping you from investing it is time to reconsider. After all, the key to future financial security is to start investing early. While investing may seem like dangerous business, there are steps you can take to ensure that your investments thrive and help you achieve your long-term goals.
What You Need to Know
Educating yourself on some investing basics can give you the confidence you need to start your investing plan. Everyone seems to have an opinion about what you shouldn’t invest in or what the next big thing will be. In truth, a lot of what you see on the internet or hear from your social circle isn’t always accurate. It is important to arm yourself with the skills to filter through all the noise and know enough to realize you may need a professional’s advice when it comes to getting started in investing.
2. Start small
Take baby steps. There is no need to dump your entire life savings into the stock market right away. Ask an advisor to help you set up a plan to start making monthly contributions into a retirement account. This strategy will keep you from feeling like you put too much on the line. As savings grow and you start seeing the results of compounding interest you will feel more confident in your investing.
3. Understand Your Strategy
It is one thing to have an advisor put together an investing strategy for you, but it is another thing to understand that strategy. The more you understand about the investment choices you have made the less likely you are to make emotional investment decisions that can be costly to you. Ask your advisor to go over the details of your plan with you until you understand. Don’t be afraid to ask questions… They are there to help!
4. Accept that the Markets Will Go Down
You may have a great investment portfolio, but it will always stand true that no one wins all the time. There are always risks when investing. The markets fluctuate unpredictably in both directions all the time. The people who will lose most often are day traders and investors who panic and make emotional decisions when the markets are down. If you prepare yourself for occasional drops in the market it won’t seem as scary. Choosing solid, long term investments will reduce your risk drastically and will help you recover from the tough times and benefit from the good times!
Don’t let fear keep you from reaching your financial goals. Even after some of the worst financial downturns, the markets correct themselves. Meet with an advisor who will help you create a strategy to stay within your risk tolerance so you can feel comfortable with your investments.