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By Lindsey Bell, chief markets & money strategist for Ally
Younger investors are shying away from the stock market.
The change of heart comes after many millennials and Gen Z got their first taste of the benefits of financial markets. The bull market, meme stock mania, and crypto frenzy of 2020 and 2021, attracted many newcomers. Then came 2022. Once-popular tech startups, travel stocks, IPOs and speculative cryptocurrencies endured sharp drawdowns. It’s been an uncomfortable reminder that stocks don’t always go up. But that doesn’t mean abandoning the ship is the answer!
It’s not time to give up on investing now. A better approach—if you were among those who got caught up in the fervor of the boom—is to reframe how you think about money and investments. The stock market should not be treated like a casino. Rather, it’s a mechanism that can help you build long-term wealth over years and decades, not days or weeks.
A recent survey from Morning Consult left me a bit disheartened. When asked if they had at least one investment product in their household, younger respondents reported a steep drop from 2021. Just 57% of millennials and 49% of Gen Z adults claimed to own an investment account in June 2022, down from 70% and 60%, respectively, a year earlier.
Disappointing findings? Sure. Is there an opportunity? Yes. I want readers to take away three investing realities, so you’re encouraged to ‘keep on keepin’ on’ with an investing plan.
Being committed to your financial future, having patience, and discipline is the best recipe for building significant wealth.
To all the younger investors out there that crushed it in 2021 but now see lots of red on their position pages, take heart. Focus on the long haul, stay invested, and keep contributing to your investment plan. Consider working with a pro who can ensure you are doing it right.
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Lindsey Bell, Ally’s chief markets & money strategist, is an award-winning investment professional with a passion for personal finance and more than 17 years of Wall Street experience. Bell’s unique ability to connect the dots between data and real life and craft bite-sized money ideas that people can use and apply stems from her deep background as an analyst, researcher and portfolio manager at organizations including J.P. Morgan and Deutsche Bank. She is known for demonstrating why and how an understanding of all things money improves a person’s finances and overall well-being. An ongoing CNBC contributor, Bell empowers consumers and investors across all walks of life and frequently shares her insights with the Wall Street Journal, Barron’s, Kiplinger’s, Forbes and Business Insider. She also serves on the board of Better Investing, a non-profit focused on investment education.
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Options involve risk and are not suitable for all investors. Options investors may lose the entire amount of their investment in a relatively short period of time.
Prior to buying or selling options, investors must read the Characteristics and Risks of Standardized Options brochure (17.8 MB PDF), also known as the options disclosure document. It explains in more detail the characteristics and risks of exchange traded options.
November 2012 Supplement (PDF)
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