Why Aren’t Millennials Investing?

millennials investing

Why aren’t millennials investing?

Millennials investing seems to be a scarcity in this decade, but it doesn’t mean they shouldn’t. So what’s the problem? Why aren’t we millennials investing more?

I can’t speak for everyone, but I know personally, my top reasons for not investing in earlier years are as follows:

 

  • Lack of funds. When I first graduated college in 2009, I was feeling the recession along with many other freshly graduated college students.
  • Lack of knowledge. I never felt confidently enough to invest. I thought the risk was much too large and that the return would reflect this.
  • Lack of skill. I did not create a steady budget for myself nor did I have any type of savings. My personal finance skills were nonexistent.

Over the years, I’ve educated myself and learned the importance of investing. I’ve also improved my personal finances by taking the time to grow my savings and seek out financial opportunities. But, despite the improvement of the economy over the years, the rate of millennials investing is still low. Why is this?

Various studies show similar reasons as mentioned above as to why the amount of individuals that dedicate time to invest is lower than in previous generations. If parents were not encouraging or enforcing the investing, it seems to have rarely happened on its own. Or rather, it takes longer for it to happen on its own.

We need answers.

While this age group tends to be stereotyped as self-centered and entitled folk who are focused on instant gratification and all things digital, these studies portray a different (and more accurate) light. In addition to simply a lack of investing confidence, Merrill Lynch’s Private Banking and Investment Group’s survey on millennials and money shows that this generation is very careful in making investment choices. They want to be “shown the math.”

We want more control.

Merrill Lynch’s survey also found that trust is a big issue for millennials investing. In fact, 72% of the 153 young Americans surveyed stated that they are “self-directed in their investing.” We’d rather be the ones making the decisions than having an adviser we don’t trust working with our cash. We want to invest with people or resources we personally trust rather than just any certified professional.

We’re more conservative (when it comes to investing).

Millennials, in terms of money, have been compared to post-Great Depression era. We not only watched what happened to our parents in the early 2000’s due to the stock market crash and recession, many of us experienced it ourselves after college. Jobs were harder to come by, and therefore, our focus has shifted. We are just as concerned about our parents and their future as  they are with us. UBS Investment Bank’s 2014 survey confirms this notion. We do our research and are much less willing to take high risks with our money. Although high risk investments do often yield high returns, we are typically holding more than half of our assets in cash, according to the research.

Surprisingly, the results of these surveys show that it is more about being careful and not as much about student debt. We are still feeling the effects of the financial crisis, and this generation needs more education on the topic in order to confidently create a diversified financial portfolio. Millennials tend to have more short-term investments instead of long-term, and we also tend to care more about life experiences than substantial wealth.

The good news is that there are more online tools and resources to help educate and guide millennials on investing. WiseBanyan and Acorns are just a couple of examples of investing sites to get a beginner started. Additionally, if nothing else, young Americans should at least focus on a retirement account as their form of investing, whether it be a workplace 401(k) plan or a Roth IRA.

Knowing the importance of investing is the first step in this process, and it’s one that we need to know we can truly benefit from with the right tools and knowledge.

Are you a millennial who invests? What routes do you take?

 

Are Binary Options Worth The Risk?

Binary options can be a gamble.

Binary options can be an excellent option for beginners in investment, but are they worth the risk?

Investment typically always comes with a risk. There is no guarantee of turning around a profit, which is why you need to choose wisely and carefully. There are times, though, when it is hard to predict what will happen in the market, as was the case in the 2008 crash.

That’s why binary options seem to be so great; it simplifies the process by making your trades either a “yes” or “no” and reduces the risk of a big loss. Or, does it?

When you begin diving into the world of investing, everything seems a bit overwhelming. So, an option that makes everything simpler sounds right up any beginner’s alley, right? If you’re looking to learn more about binaries and market trends, check out Banc De Binary, where they share articles daily.

However, this 2010 Forbes article argues that binary options websites are glorified gambling sites. Binary options are rather new, and the Forbes Investor Team states in the post that they are also deceptive. Despite the controlled risk, the total invested can quickly add up in one day due to the addictive nature of binaries.

BinaryOptionsGeek.com states that the simplistic nature of binary options also make it easy to trade; however, this can be frustrating for some as it does invite those with zero investment knowledge to place a trade and cash in on your loss. (Although, that is the appeal to beginners, right?)  The site also argues that although binaries can easily and unfortunately be used as a gambling tool, it is also an excellent resource for some people to be better performers in trading.

More often than not, the person and their discipline in the industry will determine their investment success. Binary options open the door for multiple trades and a wide range of assets. With one particular focus, though, binary options can be lucrative as well as get your feet wet in the trading game at the little risk that they promise.

Whatever route you take, one trick you could use with stock is to pretend that you don’t actually have it. Seeking stock with decent dividends is key, which actually brings us to our next point.

Do your research. Truly. If you’ve been considering investing in stock more and are unsure where to start, researching is the best place. Take some time to understand the market, the trends and the basics so that you are not going in with a blind eye. Even as easy as binary options are supposedly designed to be, start small. All of this analysis also includes the programs in which you plan to use, particularly for binary options, as you will want to choose the ones who are most transparent so that you have a strong understanding of how the platform works.

Risk is fairly relative and is dependent upon the finances of the individual interested in pursuing options trading. Therefore, for you newbies, binary options at fixed gains could be worth the risk if you are able to afford a market downswing at your level of investment as well as obtaining some type of knowledge in the industry prior to starting.

As your financial portfolio begins to grow in addition to your investment experience, you can start to expand your profit ventures. Just remember to stay away from those “get rich quick” schemes. These are typically red flags.