4 Reasons Millennials Should Be Investing In Stocks
Posted on January 18, 2016 in Wealth Management
In a recent survey, only 26 percent of adults under 30 years old confirmed owning stocks. The most commonly cited reasons were limited funds, a lack of information on the topic and distrust for stockbrokers. Given the recent recession spanning much of this generation’s formative investment years, it’s not very surprising they aren’t chomping at the bit to rely on the stock market for their futures. Whether stocks sound appealing or not, experts say young peoples’ reluctance isn’t serving them well. Stocks have several benefits to offer that “safer” investment options aren’t able to provide. Here’s a list of reasons the millennial generation would be wise to move money into stocks.
Time Is On Your Side
With retirement decades away, it’s understandable that young people may feel like there’s more than enough time to build a portfolio. But there’s a flaw in that thinking. Time can be the most powerful element in compounding returns. By investing early, you can take full advantage of the potential for your investment returns to earn returns of their own when you reinvest them.
When a company’s earnings are high enough, it may pay dividends to shareholders as an incentive to own stock. In addition, the stock may appreciate so that the value of shares is higher when you sell them than when you bought them, paying you twice.
Inflation Eats Up Buying Power
Although inflation has been very low in recent years, it’s safe to say that over the long term, there will always be inflation. Prices will rise, and the buying power of a dollar will fall. That leaves the money deposited in a low-earning savings account to fall behind the rate of inflation. However, the rate of growth in the stock market has historically outpaced inflation, allowing money invested in stocks to increase in value over the long term rather than decrease.
Stocks Support Meaningful Work
As popular as crowdsourced funding has become for art and business ventures, it should be an easy sell to millennials to purchase shares of a company they support. Stocks help fund companies as they grow. If the business becomes successful, investors benefit directly. The stock market may seem like a distant place compared to the welcoming page of a kick-starter campaign, but passion projects have fueled incredibly successful publicly traded businesses throughout history, and many happy investors amassed a great deal of wealth along the way.
There is no better time than now to start building a portfolio and planning for retirement. To get this conversation started, call your local branch to schedule an appointment with an advisor or contact Chemical Bank Wealth Management at (800) 808-5404. Please visit www.ChemicalBankMI.com/Wealth-Management for more information on investment management services.