The stock market is one of the most popular platforms for investment, with over 52% of Americans having some holdings in private or public company shares. However, despite a significant portion of the population investing in the stock market, there is strong underrepresentation in adults under 35 years of age. According to data from Bankrate, only 26% of millennials own stocks. This is bad news, as it results in people having less for retirement savings, and fewer options to make money outside of regular employment or entrepreneurship.
Most young people who don’t invest in stocks cite financial reasons. People on yearly incomes lower than $30,000 are the most likely to avoid the stock market.
Lack of Investment Makes Retirement More Difficult
Economic advisors agree that failing to invest in equities at an early age results in less money for retirement.
Most people need 80% of their yearly income to maintain their current standard of living in retirement. This means saving for up to 25 years of expenses, which equates to $2,000,000 for couples who are on an annual fixed income of $100,000.
Because most families would struggle to save this amount throughout a working lifetime, stocks should be considered an important component of retirement.
Through dividend payouts, equity holdings could provide additional support during retirement. Shares could even be sold late in retirement for significant financial gains.
It Doesn’t Cost A Lot to Invest For Retirement Savings
A diversified portfolio makes money over time. Although the stock market has suffered large losses in the past, these have always been made up in the long term. Short term trades carry high risk, whereas long term holdings typically work out much better for investors.
Stocks can be purchased even on low incomes. Spending as little as $500 to $1000 per year on growth stocks could create wealth and passive income through dividends, which could then be reinvested into more shares, long-term retirement savings, or even a retirement plan. TD Ameritrade is one platform that allows for affordable long-term investments, and the online nature of the platform is perfect for millennials who want to manage their own wealth.
Too many young people delay retirement savings planning until it is too late. By investing in stocks early, there’s potential to create a robust portfolio that can partially fund retirement through additional income and saleable assets.
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