Stop Being Scared: 2 Simple, Safe Ways for Millennials to Start Investing
In 2007, the No. 1 song was Beyoncé’s “Irreplaceable.”
Obama hadn’t yet moved into the White House, and Bob Barker retired from “The Price is Right.” Apple released the first iPhone, and the final Harry Potter book was published.
And the financial crisis was ramping up.
That was 10 years ago, and today’s market is soaring high. But investors are still reeling — especially millennials.
This Study Says Millennials Aren’t Investing Because of This
More than half of millennials (57%) say they’re “strongly influenced” by the financial crisis of 2007-2008 when it comes to their investing decisions, according to a recent Legg Mason investor survey.
In turn, 52% of millennials reported being “strongly conservative” when it comes to risk.
Comparatively, of all the 15,300 investors surveyed, 36% considered themselves strongly conservative.
The survey notes other factors for not investing, like student loans, but it concludes that the biggest issue is the memory of this financial crisis.
“Given the scale of economic carnage that many young investors witnessed firsthand in their own lives and those of their families — and the degree to which attitudes are shaped in late adolescence and early adulthood — this isn’t entirely surprising,” the study acknowledges.
It also warns the dangers of being conservative so young.
“Shrinking from risk early on in adulthood could mean sacrificing the immense potential for long-term gains, compounded over time,” it states.
This isn’t new information.
“Investing is your friend,” writes Vicki Zhou, co-founder and co-CEO of WiseBanyan. “The sooner you start, the more money you have the potential to earn, the closer you are to financial freedom.”
Don’t believe it? If you save just $25 a week, you’ll potentially be able to retire comfortably at 65.
How to Start Investing Today — Painlessly and Safely
There are not-so-scary ways to start investing, ones that don’t require following the stock market or hiring an investment adviser.
You can start small, for instance, using these two apps.
1. Start Investing With $5 When You Use Stash
Until last year, Penny Hoarder (and millennial) Jamie Cattanach didn’t know anything about investing — except that she should be doing it.
Cattanach loved that Stash walked her through the investing process and defined terms in an easy-to-understand manner (err, easier than your economics book did).
She set up her account to tuck away $5 into it each week. Then, Stash takes care of the rest, investing your money into groups of small stocks, based on your beliefs and values.
It’s an easy, mindless way to automate investments. And, if your account is under $5,000, it only charges $1 a month — which is a lot cheaper than hiring an investment advisor.
2. Dump Your Change into Investments With Acorns
Another easy-to-use investing app we love is Acorns.
This one works a little differently than Stash in that it rounds up your purchases to the nearest dollar and dumps the change into your investment account. Ideally, you won’t miss those few cents.
Penny Hoarder Dana Sitar tried out the app, and she put aside an average of $35 each month.
Without thinking about it, she’s saving about $420 a year.
Acorns invests her money, so with the settings she chose, she’s expected to gain more than $1,100 over 10 years, which will leave her with a balance of more than $5,300 — a nice little surprise nest egg for doing nothing at all!
If your account is below, $5,000 the service is only $1 a month plus 0.5%.
When you sign up make your first investment today, Acorns will give you $10.
If you can’t decide which app you want to use, we wrote a comparison guide here. Or you can use both.
Do note these aren’t serious investing strategies. These are just simple, non-intimidating ways to ease into investing without feeling totally overwhelmed or like your money might disappear at any second.
Disclosure: A toast to savings! Thanks for allowing us to place affiliate links in this post.
Carson Kohler (@CarsonKohler) is a junior writer at The Penny Hoarder. She’s also slightly terrified of investing, but she feels better now understanding that fear and knowing she’s not alone.