We've all heard the narrative about Millennials – we're scared to invest, stuff money in our mattresses, and have trust issues. Any time that I've spoken at conferences or with reps from big banks, the questions about gaining millennials' trust and why many of people in this generation haven't fully embraced investing come up.
The answer from me is always the same – the bankers screwed up in 2008ish were generally terrible people, and now are getting a small dose of karma. There's also the whole $30,000+ of student loans on average thing too.
Now, these companies are literally scrambling and trying to figure out how to get on the good side of young people that are about to start making much more money.
“How are small financial startups starting to disrupt our industry?”, “What kind of advertising will work on millennials?”, “What can we do to keep up?”, etc.
They will figure out all of those questions eventually, purely because they have a lot of money to throw at them. That always helps, right?
The reality is that at some point, you have to get serious about investing without being convinced by a brokerage firm
Eventually, you will be done with your student loan debt (hopefully), and will have an income that will allow you to invest more money. You have to start preparing for retirement ASAP, whether you're trying to do it early or the old fashioned way.
Read also: What Would You Do if You Retired Early?
From experience, I can tell you that it's not always easy to make those decisions.
It's something I've actually gone through lately
I feel like this is a little awkward to talk about because I'm a personal finance blogger, but in the interest of transparency – I've spent the last two years being more timid than I should about investing for the future.
When I quit my job to do this, it was by far the most risk I had ever taken in my life. It really forced me into a little bit of a shell, because I didn't want to risk any more of the money I had saved up before taking the leap.
Read also: How I Built a $100,000 Online Income in Two Years
My biggest fear was that I'd flop and totally let my wife down, who put a crazy amount of trust in me through this process of building a business.
There was something about knowing I had a way bigger than needed emergency fund that actually helped me sleep better at night, so other than maxing out IRA's and investing my teaching retirement lump sum (which I cashed out as soon as I could)…I haven't done nearly as much as I could afford to.
I used the fact that my income was rapidly increasing with my business to justify my reluctance to take on more risk through trying out different investment strategies.
After two years of running my business (which is a pretty big benchmark for self-employed types), that is going to change. It has to for a lot of reasons, but mainly it's because I'm at a point where I know I can make money on my own without having to fall back on piles of cash.
A lot of you have straight up asked me for more content about investing, because you're probably at the same crossroad I'm sitting at.
I'm not going to stop writing about debt, making money online, or even trying to keep people motivated to make their lives better. You'll just see more from me on different types of investing as I do them, because honestly that's the easiest way for me to write about anything.
You have to create a retirement plan now…
For me, that's going to look like drastically decreasing my cash reserves and re-learning how to sleep at night. I want to create more income streams, diversify my investments and be more aggressive towards growth, in addition to continually investing more money back into my business.
It might look different for you, but at the end of the day, all millennials that have the means (or will in the coming years) have to take advantage of the number one asset: time.
Even the oldest grandpa 35 year old millennials are still very young people and can make some pretty incredible things happen with compounding interest. 🙂
Pick something you enjoy
I've spent a lot of time talking to readers, and a pretty simple concept comes through almost every time a discussion about different investment vehicles comes up. You can get so wrapped up in “do this, do that, mutual funds, ETFs, rental properties, etc. etc. etc.”
As much as “gurus” want to tell you the best way to make money (for a price), the reality is that there are a lot of ways to build wealth…you just have to commit to learning as much as you can and then go after it. If it works…good. If it doesn't, regroup and try again.
Just like I mentioned in a recent budgeting post, the most important thing is choosing a strategy that you'll be 100% engaged with and jump in. If it's dollar cost averaging, cool. If you want to flip a house, cool. You'll learn more about it as you go, and over time your strategy will evolve as your skill set does.
As always, I'll let you know how it goes.
Hey, congrats on moving from saving to investing! That’s a fantastic problem to have. 🙂 Once we pay off our student loans in early 2018, Mr. Picky Pincher and I plan to invest heavily. Our focus will be on index funds, but we’ll diversify in a few ways. I’m using blog funds to poke around in the Acorns app a bit, so we’ll see how that little guy performs.
Yes definitely a good problem to have! I’m excited about the transition for sure – definitely a new (and very cool) stage in life.
Awesome that you’re going to write more about investing! I actually have a post in the hopper within the next week or less (forget when it is scheduled for off the top of my head) that talks about how to shift from debt repayment to investing.
Cool let me know when it goes live!
Scheduled for tomorrow!
I like non traditional, tax advantaged investments. 1. Business, 2. real estate 3. Life settlements 4. Banking/lending
You mentioned this on Facebook, but I do agree that investing in a business can be a pretty great idea (if it’s successful). I need to sit down and figure out my ROI on the initial cost of setting up this site. Obviously doesn’t take into account the value of sweat equity that I put in, but it would be interesting regardless.
The title of this article is so true. Research has shown that us millennials are scared to invest, but we need to more than ever.
We LOVE using betterment. Their management fees are the lowest in the business 0.25%. You can set your allocation between stocks and bonds. So YOU are in charge of how risky your portfolio is. They use tax harvesting to help you save on taxes paid on capital gains. The list goes on and on. As millennials Betterment is one of your top options if your work does not have a retirement plan.
I also use Robinhood to trade individual stocks. This get’s me fired up the most for sure! There is nothing more exciting than directly owning a portion of a company. It’s so much fun to do some research and buy stocks from companies you truly believe in. Iv done pretty well this year I am up over 26%.
I think apps like acorns, stockpile, stash are all good but they are not a long-term investment plan. If you use those on the side with other long-term investment plans I think they can be very beneficial.
LOVE investing so thanks for posting about it. =)
I have a little bit of money in Betterment, but haven’t fully committed to it. I’m interested to see how robo advisors will survive in a bear market, which doesn’t seem to be covered (at least from a speculative point of view) in a lot of reviews that I see from other PF bloggers.
I’ve a betterment account too and I love it! I’m conservative right now because I’ve different pots of money I would like to fill but by August I’ll be investing some more. I’m on the hunt for penny stocks too! I’m looking for the next big thing which probably is marijuana
A lot of people have asked me about the marijuana! Super speculative but who knows?
Grandma millennial here.
In the past it has been property investing that has fired us up the most. But we have found since having kids and reducing our income the cash flow to hold is a bit tricky.
So the plan is to sell off some buy a place mortgage free and start investing in index funds.
In the past I was scared of the stock market, but I think that is because I automatically thought about day trading and my nerves can’t handle that. Index funds seem like a happy medium.
Looking forward to reading more about the investing side of things on your blog.
Haha I was wondering who would pick up on my grandpa comment 🙂
Congratulations on getting into investing!!! I’m still in the pay off debt phase, but because of where I live I can easily start investing in small rental properties with very little. Once I get more out of debt, I’m going to add more money to my margins account and do more options trading. Tasty Trade is really good for that. Their trading fees are really low and have absolutely no closing fees, which is where the majority of your money goes. Once I’m able to become financially free, I plan on starting a brewery and maybe a distillery, and other food based businesses. I’ve had the idea of starting a moonshine and whisky distribution company, where I invest in local distillers and help them become legitimate, and distribute their product all over the country. But, one thing at a time lol
Thanks! I’ve been investing, but now I’m at the point where it needs to be my main focus moving forward. I love seeing all the things that you plan on doing!!!
As a retired @56 educator with 2 millennial kids, I would like to suggest buying and paying off a home. The biggest expense most people have is a place to live. When it’s paid off, you will feel the same joy and freedom as when your loans are gone. No matter what happens in the economy you have a place to live and a big chunk of money if you need it for assisted living like my mom or to leverage for your business, rental property, vacation home.
We’re actually building a home right now, with plans to pay it off early.
I graduated last year and should be debt free in December. Being an accountant I’ve been fighting a lot of will to invest now so it makes me look forward to next year when I can make the switch to an aggressive investor. I’ll definitely be keeping this article in mind come then!
December will be here before you know it!
I am the CFO for my wife and I, and my biggest fear is letting her down. My favorite line in the article.
Just the truth man! I told her I was quitting my job like two weeks before we got married, so her being so cool and supportive about it has been huge.
Come on Bobby, I’m counting on ya! Let’s get you penciled in as the one of the 3 podcast that will all go live on launch day. Your background as an educator will be a HUGE inspiration to my listeners and with the addition of your success, post-education, you can inspire a whole new generation of educators. I mean, WOW, you’ve inspired me as lifetime educator and Gen-X’r so I know how great your story will be for generations yet to come!
I’m looking tentatively at an August 1 launch date, to somewhat coincide with ‘back to school’. We can do the interview anytime in June or July that fits your schedule and I’ll even send you an entry level mic/headphone set to assure best quality via skype.
You are definitely “The Man” to help change the future fate of educators by leading them by example!
Thanks! Bruce
Hey Bruce! Can you do me a favor and email me? [email protected]
Helps me keep everything organized. 🙂
Totally agree! As a millennial working towards FI/RE, student loans are priority for me after maxing out retirement accounts. Once I’m debt free, the aggressive investing starts towards freedom.
Thank you for sharing your story, I too like to have some extra cash for cushion!
No problem!
What type gets me fired up the most? Index funds. I know I don’t have the time to be an active investor!
My wife and I moved from heavy saving to heavy investing last year – a struggle at first – but have seen significant gains and change in perception of how we view things around us. From the dividends we have received to the growth funds we have invested in, it has been great to see the opportunities that come with investing.
I think the hardest part of investing is taking that first jump, clicking on “buy” the first time. Once the first step has been made, it becomes easier as well as enjoyable to see the retirement and brokerage accounts growing.
As always, great post.
Thanks Thomas!
Gen Xer here–gosh if the 35-year-old millennials are grandmas, what does that make me at 37?! 😉 My husband and I wasted a lot of money on financial advisers until we wised up. I’ve been investing with Schwab for a numbers of years now. I choose a mix of ETFs managed by Schwab so there are no trading fees to buy or sell, they all pay dividends and the expense ratios are between .04 and .07%. I always reinvest the dividends. So far I’m up between 50 and 100% on the funds I’ve chosen. A CPA friend of mine, for some reason, thought you had to be rich to invest with Schwab. Not so, but they’re helping us get there.
Well that would make you a young Gen Xer 🙂 It’s all in the way you look at it
I plan on starting my aggressive investing early next year. Just the thought of finally being able to invest gets me excited at this point. But knowing that it’s coming up quickly is really making me think about how I want to go about it.
I think the hardest part sometimes is just taking all of the advice out there on what are the smartest investments and figuring out what’s right for you. There are several good ways to go about it.
But it’s definitely apparent that the way millennials go about investing and preparing for retirement is much different than generations before. So taking my parents’ opinions about it with a grain of salt is something that I’ve had to learn. I’m pretty sure I’m going to get into house flipping. But when I talk to some of my older family members about my goals they think it’s just “way to risky”.
Great job man! What are you planning on doing investing wise? Roth IRA, SEP IRA? Index funds ETF’s? The site is looking great too btw!
I invested from day one in 100% equity mutual funds and only brought in bonds and alternatives once I was early retired and FI. It worked for me. It seemed to take ages then one day I was 401k millionaire. The plan works.
Really excited to hear that you will begin addressing investing… I should hit a milestone this August (successfully saved a years salary) and at that point I plan to begin investing very aggressively. I know it will be a process, in my mind I always seem to fall back on real estate as the ideal investment, but I know that I must look at other options.
I had a feeling that a lot of other people were in the same boat as me 🙂
No doubt….
My greatest fear would be to not be prepared… I set a goal for myself to have a year’s salary put back by the time I was eligible for promotion and tenure (I’m in academia). I’m actually about nine months ahead because I don’t go up until next Spring. I’m fairly certain I shouldn’t have any issues, but in today’s economy I would rather be certain that I had something to fall back on, just in case….
As for investing, we gotten used to living the lifestyle that enabled me to put back… Why not just keep going and invest wisely….
Congrats on moving into the investment phase! I’ve been steadily investing for about 18 years now (that makes me sound old), and am at that point where finding new tax advantaged investments is getting harder. I’m jealous that you own your own company and can leverage a solo Roth IRA… The most tax advantaged method out there. Leverage the heck out of it!!
Aggressive investing to Vanguard Index Funds, working on obtaining rental property #3, and the occasional individual stock picking. Always looking for another income stream..
Happy to see this post! You have great financial advice and I’m glad to see you adding investing as well. As an aggressive investing millennial, I think all young people should invest early and as much as they can. They have to look at investing more like saving for the future with benefits, and be less scared of the risk. The longer you invest the less effect short term risk has on your portfolio. Hope to see more posts on investing! Thanks M$M!
I’m a huge fan of Betterment for max ease-of-use and no transaction fees, and also highly recommend checking out Fundrise’s REITs to easily add real estate diversity! I also supplement with CapitalOneInvesting for focusing more on specific sectors/countries with low-cost index ETFs. (Grandfathered into a low-cost monthly plan).