In the past few months, I have started to think more seriously about my investment strategy. Most of my retirement plan right now has been 1-dimensional: INVEST A LOT! For many reasons, this is important. For those who know very little about investing, investing a lot early is the key to cushioning that retirement nest egg. Yet, I have come to realize that this is not enough.

Here’s a little bit more about my retirement strategy. I am currently using two different retirement vehicles (your employer’s 401k or 403b AND Roth Ira) to save for retirement. While it takes sacrifice to invest in both on a salary of someone just entering the work force, I have come to realize that it’s insufficient. I want to do everything I can to boost my investments while I’m young.

young adults investing

Through this new dedication to set up financial security, I have come to an important realization: I don’t know anything about active investing. That’s right – I’ll admit it. I know some stuff, but not hardly enough to feel comfortable picking individual stocks. All of my current investments are automatically diversified based on my age. For someone who enjoys directing his money and putting it to good use, I am delinquent in this area. I need to improve! I have done a lot of research on investments in the past couple of weeks and will be continue to do so. That’s when it hit me. I bet I’m not alone. Many young adults also struggle with knowing how, when, and where to invest their money. For this reason, I plan to write more on the in’s and out’s of investing. Not just basic stuff like INVEST A LOT NOW. This is important, but not everything.

One of the first things that I had to overcome when I decided to invest more money was my fear of losing my money. Many young adults also face similar fears. After working at their job (or jobs), it’s hard to risk losing that hard-earned money. While some doubt or fear may be healthy, fear can be debilitating. It can, and often does, prevent young adults from starting to invest. The only way to overcome these fears and actually start investing is to identify what’s holding you back. For this reason, I thought I would cover the common fears that young adults face when it comes to investing.

Reasons Young Adults Fear Investing (or active trading)


One of the major reasons that young adults are afraid of investing is that it is unfamiliar. They have never done it before. You’re always afraid of that which you aren’t familiar. Investing is no exception. While some young adults have taken advantage of their employer’s 403b or 401k, that doesn’t mean that they have spent time researching the stock market. In fact, most people start with mutual funds or other diversified funds that have someone else managing them. While this may be great for people without any experience, it also means that young adults don’t have to learn. It’s hard to know where to start and there is always the growing fear that you will jump in too soon without knowing enough.

Poor Recent Performance of the Stock Market

Over the past decade, there have been two sizable drops (if not more). For young adults who have just graduated from college, this means that they have grown up being aware of the volatility of the market. Take it from someone who knows first hand. My wife got advice when she was a child to invest some of her savings in order to put her ahead of her middle-school peers. Unfortunately, this was just before the time that the stock market crashed. Yep, she lost most of her investment. Talk about demoralizing, right. It happened again in 09. While she is coming around to investing again and knows it’s a long-term tool to build wealth, it hasn’t been easy. Many young adults also face this same hesitancy.

Don’t Make Enough Money

Many young adults start out with low paying jobs. It’s often an unfortunate result of getting a job without adequate experience. The truth is that many young adults struggle when they are first starting out. Some move back in with their parents while paying off student loans and others continue their college diet of ramen noodles. When you are barely making ends meet, even the slightest chance of losing any extra money is enough to give you a heart-attack. Most people start investing when they have a surplus in their monthly cash flow, so it only makes sense that young adults would shy away for not making enough money.

Not Enough Time

Being a successful trader, selling and buying individual stocks, takes a lot of work. Many young adults are quite busy. Whether it’s because they are continuing their volunteer work from college, or working two jobs to get by. Many young investors don’t have enough time to closely monitor their portfolios. Can you imagine missing the latest news about a corporation going under and being late to the party? Take it from someone who knows what it means to stay busy. I am currently working full-time, going to grad school, and blogging at night. I know that I don’t stay up-to-date with the latest news and I would hate to miss some important news that would negatively affect my portfolio.

Overcoming Fears of Investing

Are you guilty of letting one of the above reasons from starting to invest? While it may seems like the cards are stacked against you as a young adult, it shouldn’t keep you from investing. In fact, there are many advantages that young adults have when it comes to investing, but one that is perhaps most important. The thing that should convince young adults to start investing today is TIME.

Time is important to consider for many reasons. It not only gives you the duration to grow your portfolio, (Remember the importance of compound interest and why time is an investor’s best friend?) but it also gives you a little bit of cushion. In other words, if the stock market drops in the next few years, you have enough time to recover your loss – and the stock market has always came back. People who are nearing their retirement age do not have this same luxury. That is why most people become more conservative as they approach retirement age. There is less time for them to recover any drastic loss.

If you are letting one of these reasons keeping you from investing while you are young, you are making a big mistake. Take time to evaluate how much you can invest and start doing research.

Did you let the risk of investing keep you from investing when you were young?