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If
you're a member of "Generation Y" –
generally defined as those between the
ages of 18 and 25 – you’re probably
thinking of many things: going to
school, working at your first grown-up
job, finding a good apartment, hanging
out with friends, listening to your
favorite bands and so on. But here's
something else you should think about:
saving and investing for your future. As
you work to reach your financial goals,
you've got a great asset going for you:
time.
In fact, time can work for
you in a number of ways. Let's consider
a few:
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You've got time to develop good
financial habits.
Now is the perfect time in your life
to develop sound financial habits.
For example, don't abuse your credit
cards; try to live within your
means. Also, if you have student
loans, set up a repayment schedule
and stick to it. But even while
you're repaying your loans, try to
put aside some money each month in
an investment account, even if it's
only a modest amount. By doing so,
you may be able to give yourself a
financial cushion. Just as
importantly, you might develop a
healthy interest in investing, an
interest that can be useful as your
career advances and you have more
money available to invest.
-
You've got time to invest for
growth.
Many of your peers are investing too
conservatively. The average Gen Y
worker participating in a 401(k)
plan is putting about 35 cents of
every dollar into accounts
containing bonds and other
fixed-income securities, according
to a survey conducted by Hewitt
Associates, an employee benefits
consulting firm. That means
Generation Y members are investing
more conservatively than their baby
boomer parents, who only put in
about 31 cents of every dollar into
these fixed-income vehicles.
Since you have so many decades to go
until retirement, you need to
consider investing for growth. That
may mean purchasing stocks, because
stocks have historically given the
greatest opportunity for long-term
returns. Of course, as we've seen
quite dramatically in recent months,
stocks can go down as well as up,
and there's no guarantee you won't
lose some or all of your initial
investment. But, more than any other
demographic group, you have time to
potentially overcome short-term
price fluctuations. So, both in and
out of your 401(k), you should
consider some exposure to quality
stocks.
-
You've got time to establish
appropriate financial strategies.
As you move through your adult life,
you'll have many financial goals,
such as buying a home, saving for
college for your children and
building resources for a comfortable
retirement. To achieve these
objectives, you'll need to employ a
variety of saving and investment
strategies. Given your stage of
life, you have time to carefully
plan out these strategies to be as
effective as possible.
-
You've got time to get the help you
need.
To improve your chances of meeting
your long-term goals, you may want
to work with a professional
financial advisor, someone who will
take the time to understand your
needs, preferences and risk
tolerance.
As a member of Generation Y,
you've got a lot of hopes and dreams,
and you've got time to achieve them -
especially when you learn good financial
and investment skills. |
