A Message to Young Investors: Financial Regrets Should Be Motivators
Although not so surprising, a trend in the last 12 months from the Millennial and Gen-Z generations has given me pause on how financial advisors like myself can help young professionals with their financial goals. I truly believe it’s up to financial advisors to reach out, take initiative with young investors, and guide them on a path to financial success.
There’s no doubt I can utilize my personal and professional networks with greater impact, and this article from CNBC produces a study from MagnifyMoney on regrets Millennials and Gen-Z had this past year wishing they had invested differently in the stock market.
According to the article, the most common regret among young investors was not investing more assets and decisions they made on when they bought and sold certain assets. The good news, from my perspective, is that financial regrets should, and can be, motivators for future financial growth in the long-run.
Here are some friendly tips for those Millennial and Gen-Z professionals motivated to have a better year in 2022 on the financial front:
1. The best part about embracing investing regrets or mistakes is you know how to grow and get better at it. It’s critical to know yourself and the goals you want to reach. It may be challenging for younger generations, especially Millennials, to be trusting of the stock market having experienced previous volatility like the Great Recession in the late-2000’s. But, keeping your financial portfolio simple and focusing on your time horizon is key.
2. Do you have a solid debt reduction plan in place? If so, great! Be sure to stay on top of it and adjust your own debt strategy when necessary. If you don’t, contact me or my colleagues at IEM! We’re more than happy to walk through any debt circumstance you find yourself in. A lot of young professionals overlook debt and forget that it can suck up a lot of potential cash flow for investing. To quote Adam Smith: “What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?”
3. There’s something special in realizing time is on your side – so take advantage of it! Make sure you are contributing to a 401K plan as early as possible and start saving for retirement. Making regular contributions and setting aside a percentage of your monthly income will only serve you well in the future. You may not see the benefits right away, but once you get to your retirement stage, it will be well worth it.
4. There’s one key word to remember when investing: diversify. It’s important to know that the market will fluctuate for a host of reasons. Having a diverse portfolio will limit risk and exposure across several economic sectors. Whether you hold a range of risky or safe stocks, bonds, and other assets, having those risky and safe options spread out across the financial spectrum will hopefully mitigate negative returns.
5. Have a financial call to action! It’s wise to get help with the expertise of a financial advisor, and it’s not as daunting as it may seem. Plus, the relationships between myself and my clients is where the real fun is for me, and working with younger people is a great, yet rewarding challenge.
~ Presented by Dan LaNasa