Millennial Money: Investing Strategies for Millennials

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A cursory Google search will turn up a few billion articles about how millennials are either causing the collapse of society or have inherited a collapsing society from their parents. While neither of these extremes is true, people love dramatic headlines and stirring up controversy in the name of clicks, so it’s a popular enough conversation.

In truth, the manufactured battle between Baby Boomers and their Gen Y offspring isn’t really about which generation is smarter or better, but how industries and financials have changed in the last 50 years. Since the 1980s, the number of private-sector workers with pension plans has gone from 38% to 15%. And while the median household income has doubled since 1985, the median home price has tripled or quadrupled. Everything is more expensive, debt is more prevalent, and career paths are less defined.

Even so, millennials still understand the importance of saving for retirement. A Transamerica survey showed that the majority of millennials plan on retiring early, even though said majority has far more debt than savings. It’s unclear how some of these people plan to get from point A (suffocated by student loan debt) to point B (retiring at 50 and sailing the world on a 70-foot yacht), but that’s the goal. Honestly, I think it’s a worthy goal; now we just need to make a plan that puts the goal within reach.

Investing without the help of a pension or a steady income isn’t easy, and that’s why more millennials list debt repayment as their top priority over retirement investing. It takes a concerted effort to save and invest these days, but I have confidence that this generation - which now makes up more than 50% of the workforce - can conquer modern financial challenges. Here are a few ways to make it happen.

1. Stay Focused on Debt

At some point, we need to undergo a complete reeducation about lending and borrowing. Loans provide an important facet of a free market, but when extreme debt starts to eat away at people’s financial freedom, that’s a problem that needs to be fixed.

Until that time, millennials are wise to prioritize debt reduction. Nothing holds you back more than monthly credit card and student loan interest payments, robbing your future self to pay for expenses and experiences of the past. If you don’t tackle those outstanding balances and avoid taking on new debt in the process, the burden will remain and get worse.

Since the concept of paying down thousands and thousands of dollars in loans oftentimes overwhelms, you need to have simple steps you can take to make it all feel more manageable.


When your debt dwarfs your net worth, it becomes really easy to get complacent. You start to think that the only viable financial strategy is winning the lottery, and anything else is just putting lipstick on a pig. I read that the average American spends over $200 on lottery tickets, which confirms my suspicion that people actually consider Powerball tickets an investment. Spoiler: they aren’t.

It won’t get you out of debt, but refinancing your student loans can make a big difference in what you pay each month. With so many college grads saddled with enormous balances, a handful of lenders have sprouted up with the objective of easing that burden. Refinancing companies like Splash Financial can save graduates hundreds, even thousands of dollars each year, speeding up the repayment process and drastically reducing the amount paid on interest.

When you have debt that accrues and compounds interest, every penny saved makes a difference. Don’t let these loans turn you into a nihilist, thinking your financial situation is beyond repair. Look at your options for refinancing and celebrate that lowered interest rate.


“I don’t want to let money run my life,” said the underpaid graduate with loads of debt as he booked a flight to Europe.

Once you make the decision to run up a credit card or take on a mortgage, you can’t ignore the consequences. The longer you allow that debt to linger, the less time you have to invest in retirement and the more likely you are to work well into your 60s or 70s. If you start investing in an IRA when you’re 25, your money will achieve so much more than it will if you don’t open an account until you’re 40. It might not be fun to tighten the purse strings in your late 20s, but it’s impossible to overstate how important it is that you do.

There are no two ways about it: if you want to invest and retire, you probably have to sacrifice a vacation or two in favor of paying off loans.

Hustle on the Side

When your paycheck barely covers your rent and your groceries, the idea of paying down a credit card seems impossible. You view your earnings and your debt as sum totals, and that means there’s no extra money to put toward loans.

Earning just a little extra on the side, even if it’s $50 a month, can help with this mental hurdle. Drive for Uber, have a yard sale, sell baked goods, whatever lets you earn a few extra dollars that will go directly toward your loans. It might seem insignificant at first, but the effort can help you pick up steam and pay off your debt much more quickly.

Whatever solution you choose, those loans have got to go. Once you’ve eliminated your debt, you’ll feel a freedom that’s, well, indescribable.

2. Slow and Steady Wins the Race

On any given day or week, the stock market can either make or lose a ton of money. In any given decade, you’re all but guaranteed to see significant returns if you invest in quality stocks and then walk away.

We love instant gratification, and all of our apps and conveniences increasingly focus on making us happy with the press of a button. With online trading, it would appear the stock market can offer the same quick fix… only it can’t.

Your retirement account isn’t meant to make huge gains in a hurry. While you’d be thrilled to have a stock that went up 1,000% in a few hours, that shouldn’t be your goal. If you spend all day wheeling and dealing and trying to beat the markets, your strategy looks pretty similar to the person spending $200 a year on lottery tickets.

Meanwhile, every graph shows stocks dipping and rising while always maintaining an upward trajectory. Some months you’ll be down, over the years you’ll go up. Along the way, you’ll collect dividend payments that can be reinvested and used to diversify your holdings or double down on a strong position. Invest in companies that have a consistent earnings history and don’t worry about buying super cheap stocks. If you’ve got the cash, go ahead and buy those $1,800 shares of Amazon. In 10 years, that asking price will be a drop in the bucket.

When you know the investment isn’t meant to pay out immediately, it becomes easier to slowly contribute. For stock purchases, save up until you have $1,000 and then buy shares in a company you love. The price of those shares will go up between the time you start saving and when you’re finally able to purchase, but then the price will continue to rise. You can’t be deterred by something that didn’t happen in the past when you’re trying to plan for the future.

Throwing back to the instant gratification thing, it doesn’t take much effort to buy stocks. If you have the money, any number of online brokers will gladly maintain your account. You can do it all on your own, purchasing shares without any advice, or you can open a retirement account (Betterment is a strong option) and leave the money management to someone else. The question then becomes, what type of retirement account makes the most sense?

3. Go Roth

While cash flow remains tight, take advantage of tax-free growth. Both traditional and Roth IRAs have merit, but the millennial crowd probably has more to gain with a Roth account.

Both options tax your contributions, it’s just whether you want to pay those taxes up front or when you withdraw. It can be hard to predict what the best option is, but if you don’t have a lot of money to invest and you’re trying to get that retirement account up and running, you can put more dollars to work if you go with the tax-later IRA. The more dollars you put to work, the faster that money will grow and recruit additional working dollars. By the time you’re paying taxes, you’ll have been contributing for years and built such a vast amount of wealth that you’ll hardly notice.

An IRA run by a fiduciary puts you in the best position to grow wealth. A 401(k) through an employer is better than nothing, but it’s not really the free money that some would lead you to believe. Yes, a good employer offers it as a benefit and matches your contribution, but some executives use it as a bait and switch, matching your contributions (assuming you work long enough to become vested) but otherwise avoiding other benefits and raises you might be entitled to.

Even if you do receive an employee match and get every cent contributed, most employees have no idea what’s happening within their 401(k). Some broker you’ve never met is buying and selling shares to meet a certain quota and answering to people who don’t have your best interest in mind. While you don’t get robbed in the traditional sense, you definitely don’t maximize your earning potential.

Fiduciary. IRA. Roth if you’re just getting started. Take the 401(k) over nothing, but know what you’re getting into.

4. Don’t Buy a House

When you’ve got the cash, go ahead and buy yourself that house. When you still have unpaid student loans, no retirement, and no emergency fund, a house is the last thing you need to own.

Real estate investing is one of my favorite uses of money. Land prices continue to soar and investing in something tangible creates a great sense of accomplishment. With that said, I’m constantly reminding people that the home you live in isn’t an asset. You have equity and it will be worth something when you decide to sell, but until that point, a house will prove to be a big financial burden.

A rule of thumb: debt can be useful when acquiring an asset, or something that increases your worth or revenue streams. While a rental property does this - enabling the owner to generate income while paying down the mortgage - a two-bedroom house for you and your family does not. You’ll build equity as you pay off the property, but you’ll also lose money to interest, taxes, and repairs, and none of it will be recuperated in the foreseeable future.

Real estate is a great investment, but the timing needs to be right. For the millennial with limited funds and savings, it’s probably a bad idea to start saving up for a downpayment on a house.

5. Invest in What You Know

You know what’s exciting? You can invest in TONS of stuff. If you know what you’re doing, anything from art to domain names to shoes to stamps can turn into a valuable holding. Please don’t take this to mean you should start collecting stamps instead of paying off your loans, but do understand your interests have some bearing on what you can do with your money.

For example, digital engineers and developers might have insight into growing businesses within the tech world that are worthy of an investment. An artist or art history major could know if a particular painting seems to be selling well below market value. There’s a lot of money to be made in foreign markets, so if you know everything about emerging economies, put your money where your brain is.

Most of all, apply your knowledge to the stock market. When I tell people to buy shares of companies they love, I’m assuming they have at least a decent idea of what those companies do and how they operate. If you use a 3D printer at work and think its the coolest thing since sliced bread, research the manufacturing company and consider becoming a shareholder. As complicated as finance can be, anyone in the world can still have some investment insight.

Millennials have a different path to financial success than their parents did. For some, it will be a much tougher road to travel. For others, it’s simply a matter of learning to live within their means and invest what they can in companies they understand. As long as you think long term and make informed decisions, you will end up with just as cushy a retirement fund as your parents.

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