The majority of Americans say retirement investing is a priority, but more than half consider Social Security a top-three source for funding retirement, and 40 percent of millennials expect Social Security (along with 401(k)s and pensions) to fund their golden years, according to Capital One Investing’s Financial Freedom Survey.
“With the future of Social Security uncertain, all Americans, and millennials in particular, should be proactively planning for their financial futures,” said Yvette Butler, president of Capital One Investing, a full-service brokerage. “There are consequences to sitting on the sidelines, most importantly a smaller nest egg in the long-term.”
93 percent of millennials say that distrust of the markets, lack of knowledge, little understanding of pricing and costs, and general complexities make them feel less confident about investing.
“Now more than ever, the onus is on the individual investor to plan for a financially stable future,” said Butler. “The industry needs to offer millennial investors educational tools and transparent products that will support them as they do so.”
With that in mind, Butler offers several ideas that may help younger investors establish a straightforward financial plan they can stick to.
• Start early: The earlier you start planning and investing, the better. Once you have an emergency fund saved, you may want to consistently contribute to a diversified retirement account to try to maximize your long-term gains. Even small amounts invested today can add up over time. Tools like the ShareBuilder Investment Plan enable you to invest a set dollar amount and buy fractional shares of stocks, ETFs and mutual funds.
• Go online: An online investing account is easy to open and doesn’t require a lot of cash to get started, and online investing and mobile apps give you increased on-the-go flexibility.
Low-cost portfolio building tools that take into account your investment horizon and risk tolerance can also help develop a strategy that works for you.
• Get educated: From stocks and bonds to mutual funds, ETFs, IRAs and 401(k)s, there are a lot of strategies and vehicles out there, and it may seem overwhelming at first. In fact, according to Capital One Investing’s survey, more than half of investors of all ages say their lack of knowledge and experience in investing hinders them from feeling confident about taking action. You may eliminate this barrier by exploring free financial resources and educational tools that can help you sort out the facts and learn about tried and true investing principles.
• Ask for help: A trusted professional can offer unbiased advice, and may help you develop an investing strategy you can follow and adjust, while instilling confidence about your future.
When it comes to establishing a financial plan, stay motivated by determining clear goals, and don’t forget to pat yourself on the back as you reach various milestones. Remember, the work you do today should pay off for years to come.