Despite the negative rap millennials are getting for not having enough financial sense to acquire property or hold a steady stream of income, an article from the New York Post stated that nearly seven in ten millennials are investing financially in something.
According to the same article, a new survey of 2,000 millennials found that 85% of them do not, in fact, feel too young to invest.
But for those who feel a little intimidated with the concept, read on to find out how you can start with affordable, low-risk investments to get your feet wet before diving in.
- The first rule: feed your bank account, not your appetite.
Above all else, save. Stick to a budget. Open a debit account exclusively for regular monthly expenses. Everything else left should be in a separate savings account that you won’t be able to access as easily.
Quick Tip: The basic rule to saving money from your regular income is to divide it up after-tax income and allocate it to spending 50% on needs; 30% on wants, and stocking away 20% to savings.
- Insure yourself for contingencies — and for your emergency health needs.
Insurance isn’t just for a rainy day. Explore your options for insurance PLUS investment where part of your premiums are allocated to low-risk investments (e.g. stocks). You get a payout after a set period – usually between 5 to 10 years depending on the plan. A good starting point would be a P30,000 quarterly plan.
- Take a (calculated) leap of faith by engaging in business.
Franchising is a very good idea for professionals who have savings set aside. With a few hundred thousand pesos of savings, you can get started on a well-known, stable franchise. The good thing about this type of business is that you’re not starting from scratch. You skip the huge cost of product development, the nightmare of store construction logistics, supplier hunting, and staff sourcing.
Most of your efforts will go to surveying your market and finding a good location.
If you’re keen to get started soon but aren’t as liquid as you’d like, take out a collateral loan to get the ball rolling. Use one of your assets like your car, your condo, or your house and maximize their value. Make the necessary calculations for the monthly amortization to ensure you can manage both the business and your loan payment.
- Venture into the stock market.
The advantage of being a millennial is knowing how to access information about almost anything – including how to invest in the stock market without a broker.
Owning stocks essentially means having shares in a company. One important note to remember is to not expect an immediate return of investments. Stocks are highly dependent on several factors like the number of shares bought, the profitability of the company, and even the economic climate.
Nevertheless, this kind of investment is low-risk, which makes it an ideal trial run for millennials. An investor only needs at least P5000 to open a trading account.
Best of luck with your investment ventures!