Millennials Shouldn’t Ignore the Stock Market
If you can enter it, the stock market can work for you
Opinions / September 18, 2018
Note: This article does not constitute investment advice and should be read as an opinion based on the experience of the writer. The writer has no securities qualifications.
Capitalism has left a bad taste in the mouths of a lot of millenials. Bankrate found in a 2016 survey that only one-third of people aged 18 to 35 invest in it.
But the stock market has always been open for anyone with more than $500 in savings. Brokerage fees are getting cheaper, especially with computers playing a larger part. Most of the chartered banks in Canada have services that can make it relatively simple to get involved.
When buying and selling securities, you have a vast array of risk levels to choose from, as well as instruments that can make things as simple or as complicated as you’d like. Those who are new to the stock market should consider ETFs, mutual funds, or stocks which are considered “low risk.”
ETFs are an especially interesting option because you can distribute your risk between several different stocks. For example, you could buy a few shares of $PILL, which is like buying into the pharmaceutical industry—in this case, Pfizer, Johnson & Johnson, and so on. There are similar ETFs for mining, oil, software or hardware companies, and so forth.
You could buy bank stocks, which traditionally don’t move much, but they do tend to offer a dividend. This is the company’s way of passing some of its profit over to you. Though it’s not true in all cases, stocks with dividends typically aren’t going to grow considerably, but are stable and profitable. There are more risky and volatile stocks out there like Tesla, and given the negative numbers on their balance sheet, you should approach this with caution.
Psychology has a tendency to drive a great deal of the market. While a large part of a stock’s value is tied to its ability to generate profit, the perceived future value of a company also plays a large part. This is why you may see growing stocks with high debt loads on their balance sheets.
Sometimes a new investor buys a stock, checks it the next day, and sees that they just lost three per cent of their investment. If you’re new, this might give you a little bit of anxiety, but small adjustments such as these are rarely meaningful in the long term. If there’s a large dip or jump on a stock, there’s often a good reason for it. A big one can be quarterly earnings, and whether or not they meet their projected expectations. Sometimes it’s related to news items, so if Trump applies tariffs to imported cars, expect Volkswagen’s stock price to dip.
You can also bring your personal ethics into your investment choices. For instance, if you’re more environmentally inclined, you can stay away from oil companies and put your money into green energy if you so desire.
The stock market has been a way for people to stay in the middle class, or even to join the upper class. The more Millennials get involved, the better the economy could become. Millenials are generally more equitable and socially egalitarian than the generations before them, and that’s the group I would like to see on the boards of publicly traded companies.
While the stock market isn’t for everybody, especially for a debt-loaded generation like ours, it’s worth considering if you have some money saved up. If you do your research, stocks will fluctuate but stay in an acceptable trading range and give you dividends, and while you shouldn’t expect quick and easy money, you might be happy you invested within a year or two.
If you’re interested in getting into investing, make sure you research, research, research. Always take advice from more than one person.