Tahoe-Truckee Market Beat: Millennials and long-term investing

In some ways, millennials have a difficult time with finances. Student loan debt is ridiculously high. It’s tough to get a decent education without spending thousands and thousands of dollars.

Millennials make less money than their parents did and are less likely to own a home than their parents. Millennial men today are more likely to live with their parents than with a partner or on their own.

Young people today are also not investing and saving as much as they should be. In order to build a substantial retirement nest egg, it’s very important to get an early start, save as much as you can afford, get a good return on your investments and try to minimize taxes by using tax advantaged accounts like an IRA or a 401k.

Yet, investing today is better than it ever has been. Investment expenses have lowered dramatically. Years ago there were no discount brokers and mutual funds were very expensive.

The total expenses for some mutual funds including commissions and management expense was over 8%. Stock commissions per transaction could be over $100 per trade.

Quality academic research used to be very limited, too. Today, with the click of a mouse you can find excellent academic research on a wide variety of investment topics.

Years ago, that type of research was difficult to obtain and could be quite expensive. Serious academic research from a variety of qualified institutions is readily available on the internet today.

Commissions and expenses are lower than ever and are continuing to trend that way. The ETF has made access to a wide selection of investment vehicles simpler and more efficient than it ever has been.

By using exchange traded funds investors today can diversify their holdings in ways that would not have been possible just a few years ago.

It’s easier than ever now to invest in low cost broad based stock index funds, both US and international. Sector funds allow investors to focus on specific sectors of the market, like technology, consumer discretionary or telecommunications.

Bond funds make it simple to own a highly diversified portfolio of bonds from US Treasuries to municipal or corporates. There are stated maturity funds nowadays that allow investors to diversify and still retain control over the maturity date of their bonds so they can use strategies like bullets, barbells and ladders.

Investing today is simpler and more efficient than it ever has been.

Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at www.sellacalloption.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.