Millennials are those in the 18- 35 age group. The 2016 Schroders Global Investor Study reveals that millennial investors face several obstacles such as a troubling short-term investment viewpoint, unusually high-income expectation and several dependents to support now and in the future.
According to the study millennials invest mainly
- To top up salary
- To grow a portfolio
- To increase pension
- To generate income for children/ relatives
- To purchase something other than a house
- To pay the deposit on a house
- To pay education costs
- To purchase health care
One expert remarks that this is the worst way to look at investments. This type of outlook could result in a huge short fall in terms of millennials meeting their investment goals.
Another expert says that anybody can benefit from these financial strategies: budgeting, persistent savings investments strategies and debt management. Here are seven approaches to help millennials become better investors.
Begin now; there is no time like the present! Listen to the advice of older persons such as your family or friends and get started.
Evaluate your situation
Watch your spending. Look at the money coming in and the money going out. Is there anywhere you can save a dollar? It’s the only way you are going to know if you are spending too much.
If you are not comfortable with doing it alone, find help. While the internet is an endless resource, it is difficult to find the correct information there. One expert says millennials would do well if they consult an adviser, check investing books or courses.
Retirement may seem like distant dream to the majority of millennials, but you should nonetheless set other goals in the interim because they will affect how you invest. Goals such as getting married, purchasing a home, putting aside funds for your children’s college education will influence your investing strategy.
Begin with a tax-free savings account (TFSA) instead of a registered retirement savings plan (RRSP). TFSA gives you much flexibility so invest here first, later you can go for the PRSP.
Many millennials have college or university debts, but don’t let this prevent you from planning your investment strategy. While some financial planners will tell you it is best to pay off your loans first, others disagree. Here’s the crux of the matter, decide on how much you can allocate to paying down on your debt, and put the rest into an investment plan.
Life in general is risky. As a millennial, you have the ability to embrace risk. Get in the market with a diversified portfolio of top companies! Use this to your advantage! Get the equity exposure that will offer consistent performance. You have the advantage of age to help and a diversified portfolio to help you manage that risk.
Decide on much money you want to invest monthly. Whatever the amount stick with it whether its $100 or $250. Be consistent by using either a preauthorized contribution or dividend reinvestment or both says one expert.
As a millennial, you have the time to create a consistent financial plan. Go for it!