3 Investment Strategies for Millennials

3 Investment Strategies for Millennials

Over the past years, it cannot be denied that the financial markets and global economy have drastically changed. Because of this, it is not surprising to see that different generations, especially millennials, have varying views when it comes to investing.

Millennials are now considered the largest generation of today, with these people being born between 1980 and 1995. With this group edging out baby boomers as the biggest generational cohort in the United States, the influence of this generation could change the financial sector and market.

The Current Millennial Economic Landscape

Compared to previous generations, the millennial population has been riddled with more financial challenges and crises, leading them to obtain college loans to fund their education. It does not help that they have gone through a number of economic downturns, having less than ideal job prospects, and stagnant wages.

All of these circumstances surrounding the millennial economic landscape led to increased anxiety about finances and more stress on accumulating savings and wealth, which has proven quite a challenge for many of these young adults.

Given that the generational experience of millennials is far different from that of others, and with the amount of debt put upon this group, it comes as no surprise that there is a shift in their financial goals. More people are now also open to investing.

3 Investment Strategies to Implement

  • Start Investing Early

Millennials are definitely on the younger end of the spectrum compared to the baby boomers and the Gen Xers, so investing early and while they are still capable of doing so will only benefit them in the long run. If you belong to this group, remember that time is on your side and that the market is yours to play with.

For those who are currently employed and who have money on the side to spare, matching the retirement or savings program by your company, such as the 401k, is a great idea. This allows you to extra money on the side while also managing to save money directly into your savings account.

  • Determine Your Personal Risk Tolerance

Time is on your side, especially for those who are still in their 20s. This means that you have a longer time in allowing your money to stay on the market before even thinking of retirement. This is also enough time to make up for any losses, so taking risks can help pay off in the long run.

With many of the young investors of this generation understanding that investments are never risk-free, it is important to gauge your personal risk tolerance and weigh this against your financial capacity. Doing so can help you better decide not only where to invest, but how to do it smartly.

  • Consider Diversifying Assets

There is still time to diversify your funds and you can easily recover potential losses over time, so considering asset diversification is crucial at this stage. Diversifying investments can mean more chances of growing your money and will yield higher returns.

Index, mutual funds, or exchange-traded funds (ETFs) are safer investment alternatives for millennials who are generally risk-averse and who cannot afford to lose a bigger amount of money.

The Takeaway

There are different investment and financial-related challenges that millennials might face due to the current economic landscape. However, with these tips and strategies, they can start by slowly building their portfolio and managing their investments over time.