While reading The Wall Street Journal I came across an article I found quite distressing. Apparently, your generation is flocking to my bastard cousin, real estate, in the hopes of securing your financial future. You’re flippantly tossing around hurtful statements about how I “spook” you or putting your money in my grasp is nothing more than gambling. I’m not some two-bit slot machine you pump full of quarters in Vegas. I am The Stock Market and I believe it’s time the two of us have a little heart-to-heart.
Yes, there have been times I caused panic and destruction. Your history books teach you about Black Tuesday and your parents may have lost some money when I took a dive in 1987. Most of you are probably frightened by me because of what happened in 2008. I know I caused some of you to lose jobs while others graduated from college to face crushing unemployment rates. It makes sense why you view me as a wicked witch trying to lure you into a house made of candy, only to throw you in a stew. However, this is an exaggeration, which makes it clear to me you’ve spent more time on your OK Cupid profiles than learning about me from reliable sources. Yes, there will be days we disagree and I cause your portfolio a little bit of pain, but if you only have the patience and commitment to tame me, then we can grow together.
My dearest Millennials, you are in the unique position of having what every investor craves, time. Time is exactly what will make you the next Warren Buffett. Well, that’s a lie. Time can help, but few people can make me their bitch quite like Warren Buffett. Time is important because it helps you grow your wealth while sustaining future drops in the market. Time alleviates the pressure to quickly amass money in the later years of your life so you can retire. In fact, you can retire earlier if you learn how to master investing in your 20s vs your late 30s or heaven forbid into your 40s.
Speaking of retirement, how about those 401(k)s and IRAs you have all set up to prepare for your retirement? I’ve heard rumor you think those are enough to financially prepare for your future. First of all, jokes on you. If you have a 401(k) or IRA then you’re most likely already in bed with me. And yes, those are great starts to prepare you for the future, but the key to wealth is diversifying. One 401(k) plan will not a rich man make. That money is meant to support you from retirement age, around 62, until you die which could be 20+ years later. If your 401(k) had a million dollars after taxes, because remember Uncle Sam will come for that money if it isn’t in a Roth account, then you’ll still have to live on $50,000 a year for 20 years in order to keep it from depleting. If you live more than 20 years then you need another source of money or really loving children.
For those of you interested in keeping your surplus of money as cash in a savings account, I beg of you to think about the low interest rates. If you won’t need that little nest egg for five or 10 years then why are you stuffing it away under the proverbial mattress by putting it in a low-yield savings account? Your money is pitifully wasting away, when it can be used to make more money!
While we’re on the subject of diversifying, go ahead and invest in real estate but keep some funds with me too. The real estate market can burn you just as badly as the stock market. And even if the real estate is doing well, it doesn’t liquidate into cash particularly quickly when you’re in a bind.
If you’re willing to commit to this relationship and become a long-term investor we can do well together. You need to be able to handle your emotions and remember to buy low and sell high. When I take a dip, don’t run away screaming. Instead consider pumping more money into my waiting arms. While everyone else panics and sells, you can scoop up some cheap buys and watch as they begin to rise until you can sell high. Because the secret is: I’m a cyclical beast.
Your teachers probably told you that we should learn from history. Well, if you’re young brains are as open-minded as your generation claims to be, then learn from the history of investing. Those who are willing to establish a committed relationship with me through good times and bad, in sickness and in health, are handsomely rewarded. Those who run at the first sign of trouble will never amass the wealth I can afford them.
So my Millennials, I ask that you please reconsider your relationship with me. I can offer you both the danger of being with a bad boy and the power of being with one of the biggest players in the financial world. Plus, when you catch me on a good day I’m really not too hard on the eyes.
My most sincere love and gratitude,
The Stock Market