Thus far, we’ve only discussed, in general terms, how much and how often you should invest. But it’s obviously just as important to think about the type of investments you own. And at this stage of your life, you need an investment mix that provides you with ample opportunities for growth. Historically, stocks and stock-based vehicles provide greater growth potential than other investments, such as government securities, corporate bonds and certificates of deposit (CDs). Of course, stocks will rise and fall in price, sometimes dramatically. But with decades ahead of you, you do have time to overcome short-term losses. And you may be able to reduce the effects of market volatility by spreading your dollars among many different stock-based investments, along with a reasonable percentage of bonds and other, more conservative securities.
Here’s something else to consider: Many millennials want more from their investments than just good performance – they also want their money to make a difference in the world. This interest in “impact” investing (also known as “socially responsible” investing) has led some of your peers to screen out companies or industries they believe have a negative impact on society in favor of other businesses that are viewed as contributing to a more sustainable world. If this viewpoint resonates with you, then you may want to explore these types of investment opportunities with a financial professional.
But most importantly, keep on investing throughout your life. As a millennial, you’ve got plenty of the one asset that can never be replaced: time. Use it wisely.