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Biggest Investing Mistakes Made by Millennials

December 27, 2018 · 6 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

Biggest Investing Mistakes Made by Millennials

Since we’ve heard—but don’t necessarily agree with—the common perception that Millennials have short attention spans, we’ll give you the answer right away: the biggest investing mistakes Millennials make is waiting too long to invest.

Since Millennials also apparently love irony, they’re going to love this: even though they may think cash is the best long-term investment, they are not experiencing good returns.

You can owe this common investing mistake to how we were nurtured (we’ll talk about the “nature” in just a bit). We’re all raised to believe that savings accounts are a smart idea for emergency funds and safety. That still remains true.

Jim Kramer of CNBC’s Mad Money recommends that you acquire at least $10,000 before you begin to take big risks, and that sounds like a plan. Fine, but then what?

Continue to dump money into your savings account? Sure, savings accounts pay, but you’ll need a magnifying glass to see your interest. The average interest rate among the top five banks in the U.S.: a whopping .06%. Do that math with the current inflation rate holding at 1.9%, and you’ll find that you’re not saving money; you’re losing money.

Once you have your emergency fund locked down, you’ll want to think about putting money in a place with potential to grow. And the time to do this: yesterday. Or at least soon.

Ways To Help Combat These Common Investing Mistakes

Now. Stick with us: we’re going to show you how to help reverse your investing mistakes.

Start Young, Aim High

When you’re in your early 20s, the idea of retiring at age 65 feels like forever. In fact, it almost doesn’t even feel like a thing. You may think you have plenty of time to get your act together, especially as you grow your career and climb the salary ladder. But ask any person over 30, 40, or especially 50 how fast that time flies, and how much regret comes from waiting too long to invest. Brace yourself; the investing mistakes stories will forever change you.

Look at it another way, with cold, hard numbers: at age 25, starting socking away $5,500 every year, and figure the average annual return to be 7% (we’re not just pulling that number out of the air; that was the average return on the S&P 500 from 1950 to 2009). When you’re ready to retire at age 65, you’ll be sitting on slightly over a million dollars.1 There could even be enough left over to buy that flying car and take a vacation on Mars.

Procrastination Nation

Then you have the procrastinators, the biggest investing mistakes creators of all. Plug that exact same formula into somebody starting this plan at age 30, and they don’t finish the race with a million dollars. The best they may do is about $760,000. Respectable, maybe, but not sweet. Age 40 gets even sadder: $348,000. (Where are you in this game? Find out with our retirement calculator).

That common idea people have about waiting until they’re older to start saving and investing? Kill it.

Invest in the future–not fees.




Distributor, Foreside Fund Services, LLC

The Waiting Game

Are you thinking about “timing the market?” That means holding off on investing until the stock prices come down a bit and the shares are more affordable to buy. This is right up there with the most tragic common investing mistakes. This strategy sounds smart and logical on the surface, but what usually happens is that you wait, and then you wait some more, and then you continue to wait.

Prices go up and down, and you get more and more skittish and uncertain. Before long, you get a permanent case of cold feet; the time to jump in and invest never feels like the right time. Even most professional investors consider this one of the most common investment mistakes.

The Ups and Downs of the Market

So where does that leave you when it comes to getting on the horse and galloping today, in the here and now? You may be a bit skittish about the stock market, and that’s understandable. It makes no logical sense on the surface; no one can easily predict what the market is going to do, and each day, it gains and loses points in fluctuating frenzy (that’s called market volatility).

We’ve all heard (or know of) the devastating results of a financial crisis or stock-market crash. Investment mistakes in the midst of those dramas are enough to make anybody step back and walk in the other direction. You certainly want to be cautious, but you may not want to run away. Taking a pass on risk can opt you out of some serious wealth building.

Consider history first: when you add up all the major financial crises this world has experienced, they are actually few and far between. In the time period between 1929 (the stock market crash that lead to The Great Depression) and 2015 (a year of fast-swinging upturns and downturns), a diversified portfolio of 70 percent stocks and 30 percent bonds averaged a solid 9.1% per year .

Ask Yourself, “What Risk Can I Tolerate?

As many know, market volatility is normal and something you as an investor will need to accept. But, it is possible to make investment choices in light of that fact. It’s never a good idea to rush in and risk it all. That would be a big investment mistake. Instead, ask yourself, “what can I tolerate? What won’t make me lose sleep?” and then do the research.

If you know you are a risk averse investor, you’ll be delighted to know that there are some investments that are actually considered safer than others. Examples include diversified retirement accounts, mutual funds, and ETFs (exchange-traded funds).

In fact, SoFi invests in ETFs. They’re actually a type of mutual fund, and an easy, low-cost way to invest in a diversified portfolio of stocks and bonds. SoFi builds portfolios from a broad mix of ETFs that follow over 20 indexes. These indexes represent the historic performance of groups of investments or asset classes. In the mix are U.S. stocks, international stocks, high-yield bonds, real estate, short-term treasury bonds, and the stock markets of various countries and regions.

What this means for you as an investor: well-rounded diversification, trades on an actual stock exchange, typically with lower fees and taxes than with a traditional mutual fund.

Explore Employer Benefits

If your employer offers a retirement fund, take advantage of it. Usually these come in the form of a 401(k) or an IRA. It’s usually a good idea to contribute the maximum amount allowed in either or both accounts ($18,000 per year and $5,500 per year, respectively). You can invest in stocks, bonds mutual funds and ETFs through both of these retirement funds.

More Options to Consider

Need help getting started and figuring out what’s what? That’s where a SoFi Invest® account comes in. It utilizes technology to help you reach your goals and assess the risk you feel most comfortable taking. SoFi Invest Advisors are on hand to help you calculate the time frame you’ll need to reach your goals, and can answer any questions you may (and you’ll probably have plenty) have. Their fee for this valuable service: zero. It’s complimentary.

Here’s how it works: a SoFi Invest advisor (who is an actual human being) works with you personally, helping you to map out a plan and showing you how to stick with it. We know that risk is stressful on you and your hard-earned money, so we figure out ways to reduce some of the risk of your portfolio by investing in a wider range of assets. All the while, SoFi actively manages passive assets, with no SoFi management fees. And because life and markets fluctuate and change, your investments are automatically rebalanced, as needed.

SoFi keeps the minimum investment amount low and affordable: just $100. There is no minimum holding period and you can withdraw your money at any time. Keep in mind that a retirement account may include tax consequences for withdrawing your money early, so be sure to talk to a tax advisor.

Additional benefits of becoming a SoFi Invest member include free access to over 200 SoFi events, personal career and salary guidance, and exclusive rate discounts on SoFi loans.

Set up an appointment with a SoFi Invest advisor about how you can make your cash work harder for you, and to help develop an investment approach that considers your past, present and future.


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1The projections or other information generated by the SoFi retirement calculator regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results.
SoFi can’t guarantee future financial performance.
This information isn’t financial advice. Investment decisions should be based on specific financial needs, goals and risk appetite.
SoFi doesn’t provide tax or legal advice. Individual circumstances are unique. Consult with a qualified tax advisor or attorney.
Diversification can help reduce some investment risk. It can’t guarantee profit or fully protect in a down market.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Advisory services offered through SoFi Wealth, LLC, a registered investment advisor.
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