how are millennials investingUnless you are a financial advisor, odds are good the phrase “Millennial investing” may not be part of your daily dialogue. This year, Millennials overtook Baby Boomers as America’s largest generation, with more than 75 million people.With numbers like these, there is a lot at stake related to the investing habits of millennials.    

Although these numbers are impressive, it is fair to ask how many Millennials are actively investing. After all, this is a generation whose habits have dispensed with tradition in a variety of ways. They communicate differently (text rather than call), travel differently (public transport and Uber rather than car ownership), and work differently (mobile careers rather than lifetime employment).

So do they invest differently? Or are they not investing at all?

How Millennials are Investing

According to data from a recent Harris poll, only two out of ten Millennials are active in the stock market. A majority of those who responded to the poll said they find investing to be confusing. Other surveys have shown Millennial investing to be occurring at just a slightly higher rate. Lack of money, student debt, and a sense that financial advisors aren’t relatable are key reasons why Millennials are opting not to invest.

This is an unfortunate situation. Young people have the single biggest advantage when it comes to accumulating wealth: time. In the long-term, even a modest amount of money saved or invested can be transformed into a life-changing nest egg.

The Magic of Compounding

Albert Einstein called compounding the “eighth wonder of the world,” claiming that “he who understands it, earns it… he who doesn’t… pays it.” Here is an example of the power of long-term compounding. If you save just $40 per week for 30 years and your money earns a very realistic seven percent return, your investment will be a little less than $200,000. In 40 years, you will have nearly double with $400,000. Save for 50 years and you’ll be approaching $800,000. That is why it is critically important to get started as soon as possible.

For Millennials, one way to get started is by using some of the latest investing technology, apps and platforms, that can help make the process more user-friendly and less intimidating. Instead of a copy of the Wall Street Journal and an appointment with a conventional advisor, Millennials can take advantage of tools they are more familiar with.

The Takeaway

Millennial investing doesn’t adhere to established rules and customs. But by using new tools and Millennial-friendly approaches, you can make the process of investing engaging and stress-free. So start thinking about investing to empower your future.