Home Investments Why Young Investors Shouldn’t Shy from Stocks

Why Young Investors Shouldn’t Shy from Stocks

by My Journey to Millions

The stock market has been incredibly volatile over the last couple of years, and it has caused many who are just beginning to plan for their retirement and those nearing retirement to avoid investing int the markets altogether. While for older couples nearing retirement, avoiding large amounts of investments in the stock markets is a wise decision because they have more to lose should their stocks not perform as well as expected. However, for young investors, investing in the stock market is a great decision because:

Time is On Your Side

Choosing to calculate your retirement at a young age is a great way to get on the right track for an early and comfortable retirement. However, having that kind of time on your side is also beneficial when investing in the stock markets. Stocks are highly volatile, but having the time needed to see great returns is highly beneficial. So if you are young and looking to invest, stocks are a great thing to invest in because they can achieve maturity and ride out the storm.

Better Returns

Keeping all of your money in a savings account is no way to save for retirement. The returns are incredibly low, as the interest is generally only a percent or barely over, and there really isn’t much you can do with a savings account to increase your returns. While they are highly secure, choosing to invest in the stock market while you are still young can provide you with high yielding investments which can speed up your retirement or make it that much more comfortable.

Diversifies Your Portfolio

If you want to have a successful retirement account, then you need to have an adequate portfolio that is well diversified. Adequately investing in stocks and bonds can provide you with the diverse portfolio needed to get the most out of your retirement account. While you are young, you should have 70 to 75 percent invested in stocks and the remaining amount in bonds. This will help keep your portfolio diverse and more secure while also allowing you to get the most out of every dollar you invest.  When selecting stocks in which to invest, it is a good idea to keep an eye on the market trends, since the market is constantly changing. By analyzing these trends, you can better predict what the market will do in the future. Overall, this reduces your investment risk because you will be able to see what the market is likely to do in the coming weeks and can make adjustments to your portfolio accordingly. Trends investing allows you to combat market volatility and keep your investments heading in the right direction as you get closer to retirement

The economy in general is in a precarious situation which makes investors, both young and old, fairly wary. However, if you have money to save and are younger, then investing in the stock market is a great idea. Not only will it provide you with better returns, but it will also help stimulate the economy – which will only further stimulate your retirement account.

Post by Amanda

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101 Centavos 11/19/2011 - 7:31 am

YOung people definitely have time on their side. Individual stocks are fine, but they have to be monitored. Companies don’t last forever.

Simon 11/19/2011 - 7:45 pm

Young investors should be avoiding Mutual Funds and their high MER! The loss in compounding is amplified.

MMG 11/19/2011 - 8:42 pm

Starting young is so important. I wish I was smart enough to start investing much earlier than I did. I still have plenty of time but I really missed out on those early years.

Paul 11/20/2011 - 4:40 pm

Why have any investment in bonds? I’m 32 years from my retirement target, and I’m 100% in stock mutual funds (some mid-caps, some international, and an S&P 500 fund) for growth. In another 20 years I will switch some to bonds, or if the market’s down then I’ll try to ride it until the next wave.

Barb Friedberg 11/20/2011 - 7:19 pm

Actuallly, there is some research that recommends those with good employment and in their 20’s and 30’s should have over 100% invested in stocks. Of course, that’s only for the securly employed and risk tolerant folks.

20's Finances 11/21/2011 - 10:14 am

I agree – I definitely need to ramp up my stock investments… but I am building up my income first. (Not that I am not investing right now – I just can’t invest more than I already am that this point).

JP 11/23/2011 - 9:28 pm

Couldn’t agree more. It’s much easier to make up for investment losses in your 20s and even 30s. Take the extra risk when your younger.


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