Millennials: Uncover the Ultimate Investing Secrets Now!

Without a doubt, retirement can seem like it's ages away, but the sooner you start planning and saving for your golden years, the better. With compounding interest at play, now is the time to begin investing, so that when those twilight days arrive, they won't feel cloudy at all. So stay tuned, I'm going to share what you need to know about preparing for your future.

Welcome back to another edition of We're Talking Money. I'm Phil Clark, founder and CEO of OmniStar Financial Group, and I'm looking forward to talking to you about how to prepare for your retirement.

Contrary to popular belief, Millennials are actually quite savvy when it comes to saving their money and budgeting. Most of them actually have a budget in place, and they prioritize saving for the future, whether it is setting aside an emergency fund or even planning for a special vacation. They actually do a better job than maybe they're given credit for. Despite these good habits, however, some still delay their retirement planning. We want to talk about why and how to get past that delay.

While that emergency fund you're saving toward is important, waiting to invest in retirement may not be the best choice. 80 percent of Millennials do not believe Social Security will be available for them when they retire. By only contributing to a traditional savings account, the fact is you could be missing out on tax benefits and the potential to grow that nest egg if you were using something like a retirement savings account. So what are the options for Millennials so they can get better prepared?

So retirement savings accounts could include the following. 401k: that's a retirement savings plan traditionally offered through an employer, and if you're self-employed, of course, it's something that you could offer to yourself and your employees. You're able to choose how much you'd like to deduct from each paycheck in this kind of plan before taxes, and employers typically will match a certain percentage of those contributions. That's free money. Investment options are typically chosen by your employer's advisor or the fund manager. You can then choose an allocation with those funds that matches your risk tolerance and your goals. Alternatively, if you work for a non-profit or, say, governmental organization, you might have something called a 403 b, very similar to the 401K, just a different name.

Next, you could have an IRA. Now, like a 401k, the individual retirement account, or IRA, it's a tax-deferred retirement savings account, and you establish this independently. So in other words, this could be an addition to a 401k through your employer. So with an IRA, you'll have more freedom in how you invest your money. That's one of the differences between this and a 401k. But another difference is you're much more limited on how much you can contribute each year to the IRA when compared to a 401k. Still, it is available to you, and it does give you greater flexibility.

Then there's a Roth IRA. Now, unlike most retirement savings vehicles, the Roth IRA is something that everyone should know about. It has significant differences. When you make contributions to a Roth IRA, the contributions are not tax advantage, so you don't get a tax deduction, or it doesn't come out of your paycheck pre-tax like it does in a 401k. This account is funded with after-tax dollars, but that allows you to take retirement withdrawals, and even before retirement, tax-free. You can either contribute up to the contribution limit or up to a hundred percent of your taxable income in that year, whichever amount is smaller. Now, this is one of the most popular retirement planning tools available today, and it is easy to see why. It's not tax deductible or pre-tax going in, but tax-free in the future is a huge benefit. If you don't have a Roth, learn more about them and consider opening one for yourself today.

Now, many Millennials want to know, isn't it risky to invest my money? Well, yes and no. Let's talk about how risky it might be. One of the greatest misconceptions, in my opinion, about investing is risk. While investments can be volatile, history tells us year after year that time in the market is the greatest defense to risk. Timing the market is what increases risk. So when you try to become a day trader, when you try to become this person that can read the markets and jump in and jump out and supposedly make a profit, that's when things get dangerous. I would implore you not to trade that way. I would suggest that you build a plan. It's long-term investing; it's all about time in the market, and if you play it that way, I think your chances of success will be greatly improved.

We've seen many studies that show a large percentage of Millennials are wary of investing in the stock market. I understand that, I get it. This could be the result, however, of seeing firsthand how much can be lost when the economy goes through a recession, much like it did in 2007 through 2009, lest we forget. However, Millennials were born between 1981 and 1996, and many of this group, well, unfortunately, you have vivid memories of the Great Recession. This is probably one of the reasons that Millennials are missing out on significant investment returns.

It's true that there are risks associated with investing. In fact, there's risk walking out of your house every day, so nothing in life is free of risk. How you handle those things in life can absolutely play a huge part in the amount of risk that you're taking and the benefit of taking that risk. But young professionals, well, you have an advantage. There's more time to earn and save toward retirement, and in the event of poor performance or a bad market, another Great Recession, there's also more time to recover. Moreover, during your accumulation phase, a down market generally provides opportunities to purchase more shares at a discount. And you don't have to be an expert on investments to do this. A good financial advisor can help you choose a portfolio that is perfectly aligned with your desired goals and your amount of tolerance for risk, so you don't have to go it alone.

Regardless of age, everyone needs to know, am I saving enough? So this isn't just for Millennials, this is everyone. Am I saving enough money for retirement? With the right financial planning, young professionals can reach their goal of a secure retirement. It doesn't have to be scary, and it's certainly something that you can achieve. Yet our research found that nearly half guessed when estimating how much they need to save. They guessed wrong. They were way low. They didn't think about lots of things that could become a very costly thing during retirement. Not knowing how much you need to save results in inaccurate perceptions and potentially unfortunate results later on.

Fortunately, advisors are more available today. If you don't have savings goals, guess what? These advisors, they're adept at helping you form those goals based on the things that you enjoy doing, the things that you want to accomplish, and perhaps when you want to retire plays into the goal setting. The reality is that everyone's needs and goals are different. There is no one-size-fits-all retirement plan. A written strategy can be a good starting point. Outline your vision for retirement alongside your anticipated expenses, and don't delay this, this is important. Consider expected expenses, long-term health care concerns, what you're going to want your future to look like, and when you want to stop working. And I know you might be thinking right now that's probably not in the cards, but it could be a good thought. If you want to take control and start planning your future, reach out to one of our associates if you don't already work with someone.

Now, I hope this video has inspired you to take a little closer look at preparing for retirement. If you are a millennial, or maybe you know a millennial, it might be a good time to get serious about the future, and maybe help that Millennial that you know, maybe put them on the right track by getting them in front of people that can help them get their goals on paper, on the computer, in the computer, so they can begin to follow that path to success.

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