Are you a millennial (Millennial's are typically born roughly between 1980 to middle 90's)? If so, what are your feelings for investing? When you put some money away that you won't be using for at least 10 years what do you do with that money? Where does that money get invest? Does it even get invested at all?
There was a new survey done recently by bankrate.com that surveyed those born between 1978 to 1993 and the findings have me worried. The answers given by millennials as to what you do with your saved money that you won't need for over 10 years is shocking.
Let's dive into the findings from bankrate.The best financial advice millennials say that they were given was to save. Other generations note that the best advice they were given was to invest. Why the change between the millennials and other generations? According the bankrate millennials are the most fiscally conservative generation since the Great Depression. Why this is so could be pinpointed to a number of things but one strong affect appears to be the 2008 financial crisis. The crisis happened when millennials were just coming of age and saw the affect it had on their families. They experienced major market volatitlity as well as job security issues very early in their careers. These experiences had a big impact on their behaviors and attitudes towards the market and investing as a whole.
While saving is a great thing, the idea of playing it too safe also has risk. It may not have the risk in loosing money but it still have risk. The risk of hurting your portfolio, especially if you plan to save that money for the long term is great.
What sort of risks do you face saving your money rather than investing it? One risk is that you will loose the value of your cash. With the effects of inflation your money today won't be worth the same years down the road. This is the main issue with setting your money aside and doing nothing with it. In essence you are loosing money by letting it sit there.
One thing that most financial planners typically agree upon is that a well diversified portfolio is a very smart option for anyone investing. Of course one retiring soon might have a very less diversified portfolio than one with at least 10 years left before they retire. In general though a diversified portfolio is a smart portfolio. 53% of a portfolio in cash just isn't diversified and smart.
One option for millennials and anyone looking to invest for themselves in things other than the stock market is to look at investing with a self directed ira. A self directed IRA is a regular IRA but different in the fact that it gives you the ability to invest how you want. You can have your IRA invested in a rental property, gold, silver or private placements. The truth is, you can invest in just about whatever you want with a self directed IRA and you get to choose those investments.
This is something you can do to diversify your portfolio but with not relying on the stock market. Whatever you choose to do as a millennial or if your part of any generation the advice is the same, make sure you diversify and make sure you stay involved with your savings and investments. It is your money and you should know what is going on and you should set up a retirement plan that is geared for you!
If you would like to start investing how you want with an IRA we can help you. Set up an account today and start investing how you've always wanted.
Author: Nick Barker