The Finance Blogger

Millennials Afraid of the Stock Market

Millennials Afraid of the Stock MarketMany millennials are afraid of the stock market and for good reason. With the downturns in 2000 and 2008, they may not want to place their savings in the stock market. They also are Leary of the housing market with many losing their homes and having to seek cheaper accommodation.  Now that the job environment is improving and the economy is getting stronger millennials and retirees are saving money again for their retirement, but where do they place these funds so that they can maximize their income during retirement years? Unfortunately, millenials afraid of the stock market are placing their savings in cash and low-interest savings vehicles where their money is relatively safe, but will earn very little income.

Millennials Afraid of the Stock Market – Compare

The worst case is to place your savings in a bank account where you are lucky to get 1% and that is stretching it for many savings accounts. Many are much lower and in some European countries you have to pay the bank to keep your money! Let’s assume you have $10,000 and earn 1% a year. That’s only $100 income a year and if you have to pay taxes on that income you might only end up with $70!

If you place your money in a diversified conservative mutual fund, you might get as much as 3% after the mutual fund company takes their fees and that is in a good year. On average the gain plus income is around 2% or $200 a year in income before taxes.

The stock market averages better and if you invest in blue chip dividend paying stocks that pay 3% to 4% a year, with the opportunity for the dividends to be increased each year, you stand the chance of gaining on the market while still collecting income. Sure the stocks will go down and up, ie.e  volatility, but if you invest well, your investments will keep place with inflation and be there for you when you retire.

Millennials Afraid of the Stock Market who invest in GIC’s and savings accounts will lose out on these gains and only really have what they are able to save. They will not be able to participate in the growth in the markets. For more financial mistakes to avoid, click here.

You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

AddThis Social Bookmark Button

Leave a Reply


Web Content Development