Young investors: Time is on your side

With age comes wisdom, but in investing it is wise to invest before you age. In a recent WSFS Wealth survey of consumers in the Greater Philadelphia region and Delaware, twothirds of young people ( 67%) are concerned about outliving their money. To overcome this fear, start investing at a young age and invest on a consistent basis to help achieve reasonable savings and net worth by retirement.

Oil prices up. Gold soars. The Great Depression. The Market Crash. The 20th Century and the first 20 years of the 21st Century have seen their share of ups and downs.

World Wars. 9/ 11. COVID- 19. There always seems to be a reason to wait for a “better time” to invest in the markets. Despite all these setbacks, the markets are currently near alltime highs.

As a young investor, there is almost never a reason to not invest in markets. In the WSFS Wealth study, young investors reported being the most risk tolerant, with almost half ( 46%) having a greater appetite for risk since the pandemic.

If you begin to invest at a young age, regardless of the current economic environment, the power of compounding investment returns over a lifetime should go a long way in helping you achieve your investment goals.

The survey also found that more than 66% of young investors plan to increase their investing in the next year. Don’t delay, do it now! Why? Looking at data going back to the 1930s, Wall Street strategist Savita Subramanian found that if an investor missed the S& P 500’ s 10 best days in each decade, total returns would be just 17%, significantly below the more than 16,000% return for investors who held steady through the downturns.

It’s time in the market, not timing the market that should earn the highest returns.

Young people are confident in their knowledge about investing and more than four in 10 ( 44%) do their own investing, per the study. The internet has certainly provided endless amounts of free investment advice and on- line investing is easy to transact.

This advice is helpful when markets are calm, but what happens when markets become volatile? Fear can trump common sense when markets are crashing, leading to rash and often costly investment decisions.

If you are a young investor who may panic in difficult markets or you are not as confident in your investment acumen, an advisor with experience or wisdom ( or both) can help you develop a plan, commit to consistently invest in the market and “stay the course” with current investments when markets are turbulent.

This approach should help to ensure that your savings and net worth are there when you need them.

Ray McCaffrey has more than 30 years of investment experience managing institutional, mutual fund and high net worth accounts. Ray graduated, cum laude, from Villanova University with a B. S. in economics. He received an M. B. A. with a concentration in finance from Carnegie Mellon University Tepper School of Business.

McCaffrey