Investing can be an overwhelming and daunting task when you’re young and first starting out with your investments.  But are young people today turned off by investing after seeing our parent’s nest eggs deteriorate in front of our eyes?  Or do we live in a world so focused on the here and now, that planning for the distant future seems like a nonessential task.

These questions popped into my head after having dinner with an old friend that I used to work with.  Having both worked within the financial industry, we were discussing common acquaintances and severe layoffs at all the big financial firms.  As we discussed the financial woes of the industry, I casually asked her how her stocks were doing, to which she replied that her 401(k) was down.

Assuming that she had other funds invested outside her company’s 401(k), I asked her which funds she thought were doing well during the recession, and which she personally invests in, to which she responded  “none”.  Puzzled by her answer, I further inquired as to why a financial professional would have opted to keep her money out of market circulation — I figured certainly a financial professional would have a good reason for not practicing the same values that she pitched to others on a daily basis.  But her reply was surprisingly simple:  she said that she just didn’t have the time to figure out where to put her own money and had never made it a priority to find a well performing fund that she liked or to deal with researching and buying her own stock.

Here was a woman who had spent 11 years working in the financial industry (specifically, a hedge fund), and the only money that she had personally invested in the stock market was her company’s 401(k).  So why would someone under the age of 35 not invest their money when they have plenty of time to catch a market upswing?  The sheer amount of opportunities to invest means that there are options for every type of investor — from the aggressive stock picker to the passive individual who prefers to put their money in tried and true funds and let the market run its course.

The market is not something to be afraid of.  It’s a tool that, when used correctly and responsibly, can exponentially increase your wealth (as opposed to just letting your cash sit in a savings account for 30 years).

As for my friend’s case, I chalked it up to sheer negligence.  Planning for retirement is not something you opt out of for a lack of time, it’s something you take care of regardless of if you want to or not.  The only person that you can depend on to carry you through your golden years is yourself, and if you’re not responsible enough to plan now, the future will certainly bring with it a harsh reality.  Think Wal-Mart greeter after a forty year career.

So why does investing seem to rank lower on the list of importance to younger generations?  Is it the confusing, convoluted air of the industry, the intimidation that it begets or the innumerable choices between buying individual stocks and the myriad of different funds?  Is this a case of market fear or does the future seem so distant that we’re neglecting our financial plans in lieu of living for today?

Photo credit:  Mateusz Stachowski

No related posts.