How Should Millennials of Today Invest Their Money?
As the Millenials reach the age of college graduation and set out into their careers, there is an increased demand for information about how and when to make investments. With so much media coverage of the stock market and current trends, alongside new trading methods and get rich quick schemes, it can be difficult to discern exactly which methods of investment are best.
The best investing tips come down to just a few short thoughts. The first is to realize that investment for young people is a long game. A good millenial investment strategy involves putting the money into stocks and bonds, and then leaving it alone for years to come. There is no quick and simple way to multiply your money immediately. Investments depend on the passage of time to see growth.
The next most important tip is for millenials to decide what type of portfolio they want to have. Stocks are seen as a high-risk/high-reward option, and bonds are a low-risk/low-reward option. A combination of the two should be used to allow millenials to create a portfolio that will help them reach their goals, while still maintaining control and fitting their tolerance for risk. After all, a young person may have a higher tolerance for risks because they have many years to recuperate if something goes wrong. On the other hand, as they age, they may find that they are willing to take fewer risks and need to change to a less aggressive strategy.
One other suggestion for millenials heading into the investment game is to revisit their investments from time to time to maintain balance. Stocks and bonds perform independently of one another, so there will be times that one or the other will see a large amount of growth. For an investor who started out with 80% stocks and 20% bonds, sudden growth may mean that their funds are now 85% stocks and 15% bonds. Going back in and transferring some of those funds back to bonds will ensure that the overall investment strategy stays on track, and doesn't become too heavily weighted toward one side or the other.
Ultimately, millenials looking for investing tips should do some research into what types of stocks and bonds are available and consider what their financial goals are before money ever exchanges hands. They should get to know the risks and rewards associated with different types of investing, and figure out what their personal tolerance is for taking risks, as well as knowing the timeline for their investments going forward.
Roman Temkin is a real estate developer from NYC.