Only 1/3 of Millennials Are Earning Free Money This Way

It’s time for me to tell you what you don’t want to hear: You. Must. Invest.

Good news: it can be simplified. Bad news: if you delay, it will cost you.

Hardly any of us were taught about how money and investing works in school. But guess what, it isn’t too late for you to join your compatriots:

Only 1/3 of Millennials are invested in the stock market.

This is either through stocks, mutual funds, or retirement funds (I recommend the latter two). (Source) Why does this even matter? A few simple reasons:

  • Investing = FREE MONEY. There. I said it. Earnings though investing is like free money. The money you invest earns interest. Then the money plus the interest earns more interest. Just $1000 invested in an S&P500 index fund would be worth around $113,000 in 50 years*. Compound interest and the long term uptrend of the market means that everyone can make money through investing over time.
  • You CAN afford it. Seriously — that excuse may make you feel better now but it just isn’t true and it is hurting your future. There are easy ways to cut spending in order to invest. Saving $5 a day can equate to $500,000 (half a mil!) in 35 years.
  • You WILL retire, whether you plan to or not. This is usually due to health or just plain work weariness. Even if you don’t think you’ll ever get tired, you just might 40+ years from now. The average retirement age currently is 62.
  • You MUST invest to EVER retire. For most people, unless you use the power of investing, you’ll never be able to save enough in a savings account or in bonds to ever retire. For example: $500 in a savings account = $1 Million in 167 years. $500 in a retirement mutual fund investment =$1 Million in about 43 years.
  • Pay less taxes like a pro. If you save for retirement outside of a retirement type investment, you pay full taxes on that. What chump wants to pay more taxes?! Literally everyone can start a tax-advantaged retirement account, even if your employer doesn’t offer one. Plus, non-retirement investment income is usually taxed at a lower rate than your regular working income tax.
  • It costs more to wait. Waiting until later, like “when I’m making more money” to invest is a mistake. You simply can’t make up for compound interest earned over time. Starting with less money now costs you less than contributing more money later. Use this investing calculator to see for yourself.

Stop ignoring the obvious truth: we millennials can make a fortune through investing. You can afford it. In fact, you can’t afford NOT to invest.

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Charlie Cameron is an avid investor and peer educator on money concepts missing from education.

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Disclaimer: One thing I didn’t discuss was inflation. I don’t account for it in the calculations above. Those numbers are today’s dollars, which are worth less in the future. The important thing to remember is that even with 2–3% inflation a year (decrease in value of the dollar) investing is still a FANTASTIC way to earn money!