The Modern Financial Landscape and its Accessibility to the Younger Generation
Investing stands as a rather scary concept for those who’ve yet to make the first step. It’s linked to the world of finance and that world tends to conjure a distant, almost unreachable image.
Yet as the world moves forward into the modern age, such concepts become increasingly dated. More so now than at any other point in history, investing is on a path to democratization. As that democratization continues to bloom, so too will the benefits of young adults who take the initiative to start exploring the world of investing.
A Changing Scene
It had only been a few weeks since I started college. As I walked into the campus dining hall and took a seat besides two friends, they were discussing something that I’d hardly expected from two college freshmen. It was regarding the movements of two stocks they’d recently purchased.
I was quite confused at first. Weren’t there high brokerage fees that made high monetary barriers to entry? How could they have learned enough to make informed decisions? What service were they using to process their transactions?
But as they soon showed me, I found that making a trade was as simple as a few clicks on their phone. And their savings to start? They had come from just working ordinary jobs that past summer. They were two quite normal individuals, not coming from backgrounds with financial professionals as parents or having had some accelerated high school internships. Yet, as they developed an interest in investing, they were easily able to not only pursue it, but also pursue it successfully.
The more time I spent meeting new people, the more I realized how common investing had become. People of all backgrounds were enjoying the excitement, mental involvement, and earning potential of the task. The entry barrier as I had once understood it to be was nothing short of an illusion. There was only the need for a small sum of starting capital and a desire to pursue the deed.
Much of this owes itself to the fact that the 21st century has established itself as “The Information Age”. For investing, that means that for the first time, the playing field is surprisingly equal and accessible.
Plethora of Resources
Long gone are the days when knowledge itself was an inaccessible commodity, as most things are now an internet search (or in the worst case, a book order) away from discovery. A plethora of resources exists for practically anyone to access, and an equal plethora of technologies exists to supplement this knowledge. As a newcomer to any field, an informational or resource balance between oneself and experienced individuals is one of the most worrying aspects. Especially in the inherently competitive field of investing, it’s easy to feel outclassed in the midst of it all, yet if there was ever a time for young investors to feel at ease jumping in, it would be now.
Fast to Pick Up New Trends
It’s also quite arguable to say that young investors have advantages beyond simple informational equalities that would allow them to not only match, but potentially surpass the capabilities of other established players. This ultimately comes down to the unique relative position of the younger generation, which can be incapsulated in the idea that investing is in many ways an organic science. That is, while existing algorithms and technologies hold immense power, there’s still unquantifiable benefits that our experiences can provide to both supplement the guidance of technology and uncover new, not yet popularized technologies. Understanding the world requires experiencing it, and young individuals inevitably experience the world in a more direct manner than more distant generations. As things change and society evolves, those living in the center of it all will be the first to pick up on everything from sentiments and new technologies to trend developments.
The young generation lives at the forefront of the world that dictates the markets and has the privilege of perceiving information/future patterns in a way quite literally invisible to those of an older generation. In essence, the younger generation naturally, effortlessly experiences the things that the older generation must actively strive to learn and understand. The trends that exist in spreadsheets and data points exist as day to day experiences for the younger generation, and to compound this, they also grow up directly around the most relevant technological, worldly, and societal developments, giving them a multidimensional conception of events. This all lends itself to immense benefits if capitalized on properly, and yet even on the off chance that a few investments go south, the younger generation also possesses, by mathematical virtue, a greater capacity to absorb adverse risk.
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Better to Start Now than Later
For young professionals often just beginning their careers, a lifetime of earnings lies ahead. An immense swathe of future earnings exists as a safety net for unfortunate trades and taking advantage of this comes by having the free capability to take on aggressive, volatile portfolios. The relative risk of taking on such “high risk” high reward portfolios is substantially mitigated at this life stage, while the benefits remain as powerful as ever. In fact, one might even say that the benefits are amplified, seeing as in investment terms, time itself is a value. With extra time comes extra potential for compounded interest, the gains of which are clear cut. For instance, say you’re planning for retirement around age 65. A continuously compounded interest investment made at age 25 will hold nearly double the value of the same investment made at age 40 if both are collected at the aforementioned retirement age. It’s straightforward to see why investments are a bet best made early.
When all is said and done, there’s little reason today for young adults to shy away from the investing world. It’s something that most end up undertaking at some point in their lives, and alongside the numerous aforementioned benefits to starting early, one also gets a lifetime of experience to refine his skills. Pursuing investing when you have yet to start can be broken down into a set of simple steps.
- Educate yourself on the basics — Free websites/resources like Investopedia and Khan Academy offer excellent, first rate information on economic fundamentals and investing terminology that you’ll need to get started. Aside from online sources, books can also add invaluable information. There’s no shortage of investment-related books, and you can also find ones tailored to your specific areas of interest
- Talk to people around you — See if you know anyone else with investing experience, be it a friend, family member, or mentor. They can help get you started off on the right foot and while you can self-learn, there’s always something helpful to be gained by interacting with another learned individual.
- Observe the world and your interests — Take a look around at things. Take the time to see what your investment interests and goals are, and decide if there’s specific areas you want to concentrate in or become more knowledgeable about.
- Get started with a brokerage service — Many easy, hassle free services exist today for anyone to access. A common choice for many first time investors is Robinhood.
- Look to technology — Many forms of technological assistance exist to help people make more informed investment decisions. These have a potential to assist even the most seasoned investors, and should be explored.
- Practice and learn from mistakes — Lastly, don’t be afraid to make wrong choices. Not everyone is perfect and you’ll need to accept that you won’t be right every single time.
With sufficient preparation and willingness to learn, all that’s left is to take the first steps.
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