Written by Jessie Serrano
Reviewed by Natalie Slagle, CFP®
When thinking about things like stocks, bonds, funds, and indices, it can be overwhelming with all of the information that is out there in the world. Sometimes it’s easier to break it down into its simplest parts – and then dive into the good stuff.
Today we’re going to guide you in your investing journey. Yes, there is a lot to know. This blog is jam-packed with just a sliver of it. Don’t worry, as a novice, you don’t need to know everything. However, we do think you should know some things.
Therefore, we will first discuss some basic definitions like stocks, bonds, and market exchanges and indexes. After the basics are defined, we talk about how a millennial should invest their money. Finally, we will discuss where a millennial can invest their money.
Let’s do this!
INVESTMENT TERMS EVERY MILLENNIAL SHOULD KNOW
When someone tells you to buy a stock, do you know what you are actually buying? What’s the difference between an exchange-traded fund and a mutual fund? Below we break down common words you’ll see when it comes to what a millennial can invest their money in.
What are stock exchanges?
If you turn on an investment news channel, you may hear them reference different exchanges you’ll find that stocks trade on. Some of the most well-known stock exchanges include the New York Stock Exchange and NASDAQ.
Here is some basic information to know about both:
What are indexes?
Indexes are a good way to make sure your investments are diversified. They are designed to be a basket of securities to reflect areas of the stock market. Indexes like the S&P 500 replicate a broad market with multiple underlying stocks. Other indexes like the Dow Jones and NASDAQ are more specialized or have fewer stocks.
Here is some more information about these indexes:
HOW SHOULD A MILLENNIAL INVEST THEIR MONEY
There are three themes we want millennials to focus on when it comes to investing. Diversification, time horizon, and making regular contributions. We describe each in detail below.
WHERE CAN YOU INVEST
Retirement planning is an essential part of financial planning for your future. There are many different retirement accounts you could utilize depending on yourself or your employer. The main ones we will focus on are individual retirement accounts (IRAs), Roth IRAs, and 401(k)s. Many people are familiar with these accounts, but knowing the key details of each account will provide you with a better understanding of your finances. If you have a different type of retirement (like a SEP IRA, SIMPLE IRA, or Deferred Compensation Plan) you may have different options than what we will list below. We're happy to discuss those with you in more detail as they relate to your situation!
Individual Retirement Account (IRA)
401(k) and 403(b)
There you have it! No need to look at anyone else for an overview on investing :) As we mentioned in the beginning, it can be overwhelming knowing where to start. The most important thing though is just that – to start.
Schedule a free consultation with us if you have any questions or want a second opinion on your investment strategy.
Disclaimer: This article is for informational purposes only and is not a recommendation of Fyooz Financial Planning, Natalie Slagle CFP®, or Daniel Slagle CFP®. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future. Therefore, it should not be assumed that future performance of any specific security, investment product or investment strategy referenced in the article, either directly or indirectly, will be profitable or equal to the corresponding indicated performance level(s). No portion of the article shall be construed as a solicitation to buy or sell any specific security or investment product or to engage in any particular investment or financial planning strategy. Any reference to a market index is included for illustrative purposes only, as it is not possible to directly invest in an index. Indices are unmanaged, hypothetical vehicles that serve as market indicators and do not account for the deduction of management fees or transaction costs generally associated with investable products, which otherwise have the effect of reducing the performance of an actual investment portfolio.