Tuesday, November 29, 2011

Millennials Prepare for The Future

As we continue to see world news and statistics pointing to a global slow down it is hard to see any positive event to find hope in.  The economy in the U.S. has spared no one in regards to hardship but probably the worst off have been the Millennials.  More than 30 percent of younger-age households have a net worth of zero or less, due to credit card debt and student loans. Many young adults have resorted to moving in with several roomates to manage to be on their own away from mom and dad.  With all this change and economic uncertainty young adults still need to live, dream and prepare for the future.

With lower salaries and low savings the amount of action that can be taken is limited for now but times will change eventually, hopefully for the better.  In planning for the future young adults must realize that retirement may not resemble what it looks like now for their grandparents and parents.  Although that alone might scare a few there is a high possibility that social security will not be there for the younger generation upon retirement.  This requires a more strategic approach to ensure adequate funds for our golden years. 

Participating in a company's 401(k) or an institution's 403(b) is a good choice because of the tax benefits and free money contributed by the employer.  Being well informed about where the money is allocated is important as funds may need to be strategically moved around.  This is a good choice for those not interested in being overly active in investment choices and day to day fluctuations.  For those preferring to invest and learn on their own, opening a stock market account through a brokerage may be a better choice.  This will require more footwork and will also require knowledge of the stock market.  Utilizing both the 401(k) and a personal investment account is also a good idea.  Brokerages offer IRA's which allow investors the ability to trade stocks and not pay taxes on those gains until retirement or until that money is withdrawn. 

In preparing for the future it is best to remain conservative for a while since returns enjoyed before the Great Recession may not be seen anytime soon in both the real estate and stock market. 

Seeing the stock market as an income investor through dividend paying stocks can also be a good alternative for young adults especially with interest rates near zero, rates may remain low even beyond 2013.  Global worries are real yet the world must go on and good times will come again.  If stock markets slow down or experience extreme volatility young adults have youth on their side and can ride out long storms.  Not putting all their hopes on one form of investment is a healthy view and not investing cannonball style all their money at once and in one company is also wise.

Here are a few top paying dividend stocks from the Dow Jones: AT&T Inc. (T), Verizon (VZ), Merck & Company, Inc (MRK), Pfizer (PFE) and General Electric (GE).  These stocks have the ability to generate income as well as capital gains for investors in the long run.

1 comment:

  1. A very simple and learning description has been given about US economy. I appreciate the work.

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