Millenials are the generation of people who were born between 1982 and 2002. This generation is expected to replace the baby boomers after retirement. The millenials are a very unique generation. They grew up in a society that is different from any other before. Firstly, they have grown up with technology. It has surrounded them ever since birth. Inventions such as computers and smartphones have been part of their lives during the process of growing up. Moreover, they have grown up feeling safe from negative conditions such as wars and economic collapses. They have enjoyed modern healthcare and infrastructure. As such, they have grown up in a safe environment. Millenials will make the most educated mothers than any other generation before. Some of the features that characterize their lives is tight schedules, multi-tasking and the chance to shift careers whenever they want to. Due to the nature of their growth process, millenials have been exposed to tremendous amounts of information. As such, many of them have heard of the concept of investment. Here are 9 investing and money myths that all millenials need to know about.
Investing myths that millenials need to know about
You need a lot of money to begin investing
This is a common investing myth that millenials hear all around them. Many financial experts indicate that you need sufficient capital to begin investing. They actually advise you to risk all you have and put it in some investment vehicle because it is bound to grow exponentially over time. This is a myth that millenials should not believe. Taking all you have and throwing it in some investment is highly risky and you can lose everything. To avoid this, you need to first of all save as much as you can. You can do this by using tools such as the 52 week challenge or even your company's 401(k) plan. After that, you can begin to allocate small amounts of your funds to investment regularly. Over time, this will grow into a substantial investment portfolio. It is a safe way to invest as a millenial.
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It is difficult to find quality information about investment schemes
This is a myth that is thrown to millenials who are trying to invest. It is often mentioned by veteran investors seeking to intimidate young, new ones. Thankfully, this myth is untrue. Thanks to the Internet you can find all sorts of quality information about the markets if you truly want to find it. By simply making a Google search, you can get lessons on investment literacy and also find books on investing. As such this myth is baseless. As a millenial, a wealth of information is at your fingertips.
Investing exposes you to the risk of losing your money
This is a myth that scares so many millenials out of investing. The fear of losing their money outweighs the possibility of increasing it. This myth seeks to focus too much on the possibility of losses and ignores the gains. The truth is that there is a chance of losing your money or gaining so much more. It all depends on your investment strategy. To maximize your chances of making profits, you can read material on investing and take advice from successful investors. This is one way to beat this myth as a millenial investor.
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You can trust modern investment advisors
This is a myth that many millenials have heard from their friends or elders. Sure, there are some investment advisors who will encourage clients to buy into specific, unstable stocks so that they can get tips from the companies that own these stocks. This is fraudulent misdirection and has left a general wariness of investment advisors. Thus, millenials who believe this myth go it alone. Not only is this risky, it can lead you to make progress too slowly. As a matter of fact, not all investment advisors today are unscrupulous. You can approach a professional firm and get some objective investment advice for a low cost. You can also utilize the resources in your academic institution to get some help with your investments.
Money myths that millenials need to know about
It is better to use cash money instead of using credit cards
This is a widely held belief by millenials. So many of them believe this myth and figure that they can watch their expenses better if they use cash to pay instead of credit cards. They believe that using cash makes you keep track of your expenses better and gives you a clearer picture of your daily expenditure. Despite being logical, this mentality prevents you from experiencing the benefits that come from using credit cards. Using plastic money helps you to develop your credit rating. This is an important feature to have. Later in future, you need to have a good credit rating so as to get financing for banks and other lenders. As such, millenials should ignore this myth and use credit cards responsibly.
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It is impossible to save money and pay your student debt at the same time
One of the characteristic that millenials share is student debt. It is a burden that many of them have to shoulder for a long period in their lives. The level of student debt for millenials in developed countries can be as high as $30, 000. This is an astronomical amount by all accounts. As such, it may seem impossible to pay this debt back and also save some money. Thankfully, this myth is wrong. You can actually save and pay off your student debt. As long as you dedicate a little amount of cash to your savings every month for student debt, you can make progress to pay it back over time.
Cheaper is better
This is one of the myths that is believed by a large number of millenials. They truly believe that cheap things are better because they are budget-friendly and easily accessible. As a matter of fact, this is one of the most misleading money myths that a millenial can believe in. This is because buying things which are cheap and of low quality can result in spending much more in the long run. This is because low quality objects are much more prone to getting damaged and oblige you to buy new ones. As such, you should avoid this myth and buy things that are a little more expensive but of high quality. This will save you money in the long run.
You don't need insurance as long as you have some savings
Thousands of millenials actually believe this myth. They do not take the time to invest in some insurance because they believe that they can cover any emergency costs with their savings. Even when they go for some health insurance, they pick the most basic option available. Once they get this insurance, they do not invest in any other. This is a very dangerous myth to believe. You should always invest in car, health, property and disability and life insurance. This is a safety net for you whenever you get involved in some emergencies in these sectors of life.
You should quit your bad financial habits at once to overcome them
This myth indicates that if you want to quit any bad financial habits which you have, you should quit them cold turkey. If you overspend at anything, you should stop and never look back. Despite sounding highly effective, this myth will set you up to fail. This is because if you do this and get some tough financial times afterwards, you will feel demotivated to continue and go back to your old habits even worse than before. Millenials should not believe this myth. Getting rid of bad financial habits requires patience and should be done a bit at a time. If your bad habit was spending too much on restaurant meals, then you can begin to eat at home for 6 days out of the week and go out once. This a logical and highly successful way to eliminate bad financial habits.
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The Important Take Away
Millenials are well known for being optimistic, social and always ready to take risks. Their generation is plagued by a number of investing and money myths. These are indicated above. By reading them and understanding the misdirection in them, a millenial can make the right decisions in these sectors. This will pave way for a prosperous financial future.
