Last year a study came out claiming that 62% of Americans have less than $1,000 in their savings accounts. While this number was startling and even scary to think about, another scary statistic that did not make any headlines was also circling the web. This study came out with information showing that only one in every four Americans under the age of thirty own any kind of stocks.
Most people, even a lot of financially responsible types, will not think this is a big deal. But here’s what the math says. Currently the average savings account is paying less than 1% interest per year. Some of the big banks are paying much less than that average. Let’s assume someone does their homework and gets a saving account with 1% interest, calculated annually. Let’s say they start putting away $100 a month when they graduate from college at the age of 25. When they retire at 65, they now have just under $60k in their retirement account.
Now let’s look at that same situation, but if all of that money was put into the S&P 500, a stock market index that gauges the 500 largest companies with common stock listed on an exchange. The S&P 500 has average nearly a 12% rate of return over the last 90 years. If someone were to put $100 monthly for 40 years into a fund that followed the S&P 500 they would retire at 65 with over $1 million in their retirement account.
This is literally the difference between retiring and ending up living on the streets, and retiring perfectly comfortable at 65, free to travel and spend time with loved ones.
So why are so many young people so uninterested in investing their money in the stock market? There are literally thousands of courses online that teach how to read stock charts for free. There are also thousands of market experts who consistently have made money on the stock market that post their stock trades online daily for anyone to see and follow. Clearly the issue is not a lack of resources.
The real issue is attitude. Very few people have not had a great idea for a business, or a company that they considered buying stock in that eventually took off. Rather, most people take their great ideas and before doing 30 seconds of research have already come up with 15 different reasons that they should not proceed.
This is the real reason a large number of young people have not invested in the stock market. They have thought about it, but have not been able to gather the motivation to learn and then apply.
You do not need to become an expert chart reader to invest in stocks. You don’t need to be an accountant, have millions of dollars, or have a risk-taking attitude either. There are plenty of regular, responsible people, making average incomes, who are invested heavily in the stock market.
The S&P 500 is a great example of why one doesn’t need to be an expert. Anyone in the past 90 years could have simply thrown their money into the index without doing any research whatsoever, trusting that America’s economy would continue to grow and companies would continue to thrive, and they would have seen the exact returns mentioned earlier. Imagine what doing a little research and taking a few courses could do?
If you have a pile of money sitting in a savings account and nothing invested in the stock market it’s time. Time to start truly building your wealth. There are classes, seminars, videos, and dozens of other resources out there. It’s up to you to take the first step.
