Why Millennials Should Not Fear Investing In The Stock Market

By | October 20, 2017

The younger generation of investors is usually jittery when it comes to investing in the stock market. Read on to banish those stock market jitters for good!

Why Millennials Should Not Fear Investing In The Stock Market

The younger generation of investors is usually jittery when it comes to investing in the stock market. They are wary of market volatility and generally prefer to put their money on low-risk investments until they get the hang of how the market functions.

However, here are a few reasons why you should not fear the stock market if you are an investor who is fairly wet behind the ears.

  • Investors have options

If you’re under the assumption that investing in the stock market involves a high level of risk, here’s some good news. Investors get various investment options to suit their individual investment goals and horizons. Based on your reasons for investing, you can choose to invest conservatively or more aggressively.

Saving money for a down payment on your new home? You may want to try a moderately aggressive approach.

Here’s a tip: Diversify your investment portfolio to gain maximum returns at a lower risk.

Remember, the higher risk you take with your investments, the longer you should be willing to wait before you see returns.

Additional Reading: Why Debt Funds Are A Good Investment For Beginners

  • Don’t fret about market volatility

Market volatility holding you back from building your wealth? Don’t worry. Market volatility is normal. It is a common fear among investors that the markets are going to tank and their money is going to disappear.

While the idea of market volatility is an age-old fear, infrequent, day-to-day fluctuations in the market are quite normal, and should not be something long-term investors should lose sleep over.

In fact, with the right amount of diversification in your investment portfolio, you can further minimise the effect of market volatility.

Additional Reading: Decoding Mutual Funds

  • Who said investing was expensive?

Whoever said you needed a sizable sum of money to begin investing, was a fair way off the mark. You don’t need a big sum of money to begin investing. Investing in Mutual Funds is a good option and with just Rs. 500, you can start a Systematic Investment Plan (SIP).

Additional Reading: Understanding Systematic Investment Plans

Many investment service providers are available online, completely free of cost. However, it isn’t very expensive to hire a personal investment advisor.

Remember, you can benefit more by remaining invested for the long term. Don’t sweat the frequent fluctuations in the markets. They tend to stabilise over the long term.

  • Get protected against inflation

Investing can save you from losing money as a result of inflation. If you choose to make investments through Systematic Investment Plans, you can beat market volatility and stay on top of the game. Simply putting money away in a Savings Account will not help your money beat inflation. In order to beat inflation, think of equity investments.

Additional Reading: Smart SIP Strategies

  • Plan for retirement yourself

Be retirement-ready by planning your finances wisely from early on in your career. Match your employer’s contribution to your Employee Provident Fund account. You could also supplement your retirement savings by investing in the Public Provident Fund or the National Pension System.

Additional Reading: Retirement Planning For Everyone

  • Reinvested dividends are beneficial

If you choose to invest in equity and opt for dividend payouts, you should consider reinvesting the dividends that you receive from your stocks. Reinvest the dividends earned plus any capital gains and this will add to your overall earnings in the long run.

For example, if you are aged 25 years right now and you invest Rs. 1,000 at an average return of 6% per annum, your investment can potentially grow to approximately Rs. 100,000 by the time you reach the age of 65 years. Imagine how much you could earn if you invested more?

Additional Reading: Investment Options For Everyone

  • You have enough time

Start investing while you are still young. The earlier you start investing the better your chances of building a larger investment corpus are. Time will work in your favour. Remember, the early bird gets the worm.

The older you get before you start investing, the less time you have to stash away money for your milestones and goals. By investing early on in life, you can allow the magic of compounding to work for your money.

Additional Reading: Good Investment Options For Retirement

Hopefully, we’ve managed to get rid of your stock market jitters by now. So, go right ahead and jump into the wonderful world of investments and watch your money grow.

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