Millennials have been known to be more conservative investors and even opt out of their 401(k) plans. While everyone chooses to save or invest money in their own way, it’s important to keep note of the benefits of investing aggressively.
Time is on your side
There are many benefits to being a millennial as well as an aggressive investor, one being that time is on your side. Having so much time until you retire means there is more time and opportunity for your money to grow, especially when you invest aggressively rather than conservatively.
While typical savings accounts usually have .06 percent interest rates, the money you invest could have around a 15 percent return on investment annually. This means the money you invest has so much more potential to grow along with the many years you have until retirement, rather than just sitting there earning a measly .06 percent interest in a savings account.
Risk and retirement funds
Taking more of an aggressive stance with your retirement account can seem scary, but this is another way that time is on your side. Your many years until retirement will cushion the market’s inevitable pullbacks, and allow you to take more risks, therefore seeing more rewards.
Playing it safe with your retirement account may seem like the way to go, but it might not get you to the point where you can retire comfortably when the time comes around. Yes, investment does mean risk, but it is important to keep in mind that the risks you take along with the time you have until retirement can mean great rewards.
What to invest in
When deciding to invest more aggressively, there are a few ways you can go. While there are many options, some of the things you can invest in are individual stocks, REITs (Real Estate Investment Trusts) and aggressive growth funds.
Individual stocks are riskier than other ways to invest, as they have an unpredictable return. You really just have to get lucky and hope you find a stock that will take off and give you a high return. The downside is that if an individual stock tanks, then you lose the money that you invested into that stock.
REITs on the other hand, are when an investor buys a part of a managed pool of real estate. The REIT the distributes profits to the investors as the properties in the pool start making money through property sales, rentals or even leases. REIT investors are vulnerable to the real estate market because of the single focus on property ownership, although there can be a high return on investment and potential for long-term growth.
Takeaway
Investing more aggressively allows you to have more opportunities for your money to grow. Being a millennial allows you to have so much more time to allow your money to sit through the highs and lows of the markets while still accumulating more than you would if you were investing conservatively. While investing aggressively does have its risks, there is also a higher chance for a greater reward.
Have something to add to this story? Comment below or join the discussion on Facebook.
Header image: Getty Images