Jon Markman, editor of Trader’s Advantage, says Generation Y needs to learn how to invest money as soon as possible.
And they shouldn’t study how to invest money reluctantly, or because it’s what they think they’re supposed to do … but because it works. As Markman explained to me:
“The great things about being young is that you have a long time to invest … and most of the time, the market goes up.
You’ve had the experience of two bear markets, you’ve had the experience of seeing family and friends lose the value of their houses and you’re probably really negative on stocks and negative on investing.
(But) if you really study and understand investing, you’ll realize there will be long up-phases over the course of your life.”
Markman’s preferred style for how to invest money is technical analysis — a technique that uses the historical performance of stocks to predict future performance. But what’s important isn’t how you choose to invest money, but that you choose to do it in the first place.
“There are all kinds of people who can be successful in golf or baseball or tennis,” Markman explained. “Some people in tennis have a great serve, some prefer backhand and so on. You need to start trading and discover what’s best for you.”
Heck, even if you don’t yet know your style, just learn the basics about how to invest money, and start simple.
Markman’s suggestion: Take 10% or 15% of your salary and start stocking it away in mutual funds with great long-term records like Vanguard Wellington Fund (VWELX) or Vanguard Wellesley Income Fund (VWINX), which have been around since the 1930s. Do that, he said, and you’ll have a very nice retirement decades down the road.
Markman summed up his advice on how to invest money quite simply — and it was very similar to what Warren Buffett told Georgetown students just a few weeks ago.
“Young investors across the board should be very optimistic about the future,” he said.
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