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The Investing Advice Every Millennial Needs to Hear

It’s hard to be a millennial these days.

Everywhere we turn, we see stories on how record levels of student loan debt are killing millennial’s chances at homeownership. Meanwhile, money woes for millennials mean many are putting off marriage, quite possibly for good. And according to government figures, the unemployment rate for millennials still hovers near 15 percent – a statistic The Atlantic used last year to claim that millennials “have it worse than any generation in the last 50 years.”

Yes, millennials have it rough. They’re living in their parent’s basements, struggling to keep the cabinets stocked with Ramen, and wondering which move to make next.

It’s all tragic and indisputable. Like it or not, being under thirty these days isn’t easy – at least in an economic sense.

The Millennial Advantage No One Wants to Talk About

But here’s the thing: Millennials have one huge advantage – one huge gift – that they almost refuse to recognize. This gift is something so valuable that it transcends every other item of value on Earth, and it’s something that is finite, at least on an individual level.

That’s right; millennials have time. Time to save. Time to pay off debt. Time to cultivate their passions, skillsets, and careers. Time to invest in the future. And yes, time to invest in a financial sense too. Because as we all know, the magic of compound interest is far easier to harness when you’re young.

So, Why Aren’t Millennials Investing?

Unfortunately, a recent survey from revealed that millennials aren’t taking advantage of the one thing working in their favor – their youth. According to the survey, which polled 1,001 adults to gauge millennial attitudes on investing, only 26 percent of individuals under the age of 30 owned stock in early 2015.

Survey participants listed several main reasons why they choose not to invest, none of which are surprising. More than half of those who don’t invest (53%) use a lack of financial resources as their excuse, while another 21 percent said they didn’t know enough about stocks to take the plunge. The rest cited a general distrust of stockbrokers and worry over paying too much in fees. Related: See how much you are paying in fees with our Fee Analyzer.

Those are all good reasons in theory, but disastrous when applied to the real world. It makes you wonder – what will happen to all the young people who fail to save and invest while they’re young?

“Young people who don’t invest in equities early are set to have a lot less money later on,” John Salter, associate professor of financial planning at Texas Tech University, told after analyzing their survey results.

“They won’t benefit from those extra years of letting their portfolio grow, eventually earning the ‘interest on interest’ that generates real wealth,” he said, adding that “it’s just the simple value of compounding.”

In other words, millennials who fail to invest won’t have enough money to retire. Instead, they’ll need to continue working indefinitely, subsist on government assistance and social security, or shack up with their own kids in old age.

Retirement: It’s the End Game

If you’re a millennial, you might find those ideas preposterous, or even hilarious. But don’t start laughing yet. Here are a few facts from the National Council on Aging that you might want to chew on:

According to the NCOA and various government agencies:
• 23 million Americans over 60 are already living in poverty
• 75 percent of those 65+ rely on social security alone
• One-third of senior households lives paycheck to paycheck
• In 2012, the average credit card debt among adults aged 65+ was $9,283
• 14% of adults aged 65+ face retirement with negative net worth

When you look at what actually happens to people who don’t save or invest enough to enjoy a comfortable retirement, it isn’t so funny. In fact, the idea of living in your son’s basement at 70 stops being hilarious the moment you realize that it’s not only possible, but actually likely.

And maybe it’s just me, but spending retirement in poverty sounds a whole lot worse than being 25 and having student loan debt and a job you hate. Because, no matter what, you still have time. You have time to stop and think – time to make a change. Time to tackle your student loan debt with fervor. Time to get a second or third job. Time to go back to school, finish your degree, write a book, or improve yourself in a multitude of ways.

Your future self doesn’t have that privilege. When you’re 75 and subsisting on frozen Hungry Mans, it’s the end game. You’re stuck with whatever future you, yourself designed. And if you happen to look around and think “this sucks” in old age, you’ll only have yourself to blame.

The Investing Advice Every Millennial Needs to Hear

And that’s why it’s more important than ever to start investing as soon as you can. You may think you can’t afford to, but the truth is, you can’t afford not to. Your future depends on what you do here and now, and your “future self” is begging – pleading – for you to take action not just now, but yesterday.

The internet is a treasure trove for those who want to learn investing basics. Meanwhile, Personal Capital offers free tools that can help you monitor your spending, net worth, and growing portfolio of investments. You may not have a lot to start with, but you have to start somewhere. Whether you choose to start by socking away $50 or $100 a month at first, investing in your company 401(k) up to the match, or opening a traditional or Roth IRA with a brokerage firm, it’s essential that you take that first step. Because, no matter what, no one can take it for you.

When you’re in your twenties, you think the world is something that happens to you. You wake up each day with the goal of doing the best you can with what you have; you react to your surroundings. You shrink at opportunity. You see maybe one or two years out, or perhaps five years or a decade, but you just can’t picture yourself as a little old lady, no matter how hard you try.

But the years will creep by faster the older you get, and soon you’ll look back and wonder where the time went. And if you think investing is hard now, just wait a while. The longer you sit idle, more impossible the idea of retirement will become.

So here it is, the investing advice every millennial needs to hear:

Don’t use student loans or anything you hear on the 24-hour news cycle as an excuse not to save or invest for your future. Sixty years from now, nothing will matter except for what you did with the resources you had.

You have more power and potential than you realize, but time goes by much faster than you think.

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  1. keith

    Millennials – Invest in yourself! Personal growth and well-being reap the greatest rewards.

    Personal Capital – I am happy user of your product, but this blog post concerns me. How can I trust a company whose customer engagement strategy includes clickbait and scare tactics? Can I trust you to be my personal financial advisor?

    Please realize, Millennials (and people everywhere) are struggling to pay their bills and debts. Financial instruments are often a poor allocation of funds or even an impossibility.

    Want to connect with millennials in a honest way? Show us in numbers how would you recommend managing a realistic budget.

    • Colin

      How can you expect them to create a budget for any & every person? That’s your responsibility, not theirs.

      I see nothing clickbait-ey or scare tactics in this post. It is simply outlining that a millenial’s greatest asset is time (specifically the time value of money). Even meager amounts saved early ($50-100/month) can have huge returns 30-40 years down the road. I’m sure the author is well aware of the burdens many millenials face when it comes to debt (particularly student loans) but savings can be achieved if YOU (not them) draw a budget for yourself, find ways to scale back (you may cry you have no money but have you pared back any? Scaling back your cell plan, cable plan, eating out, etc are all great ways) and invest those cost reductions into savings.

  2. Bryan Thompson

    “When you’re 75 and subsisting on frozen Hungry Mans, it’s the end game.” Best…Line…EVER! I hope this resonates with the millenial generation (which I’m a part of). You have to start somewhere. I remember Suze Orman’s Young, Fabulous, & Broke book, the rules she insists on following are golden!

  3. Millennial Investing

    I would have to agree that the biggest advantage Millennials have over older generations, that no one wants to talk about, is time. Compounding interest only works if there is time to let it work. Difficult concept for a lot of people to grasp. Investing in your retirement account is not a get rich over night scheme but a long term plan (decades for us Millennials).

    Investing may mean giving up a few indulgences along the way to save and invest but that just means you will be one step closer to financial independence. No one else responsible but ourselves. Equities are the greatest wealth creation tool known to mankind.

    Great article.

    • Holly Johnson

      You have the right idea! Now you just have to make sure you’re acting on it!