Last Updated on January 30, 2020
We provide popular investments for Millennials, as not every investment class is ideal for every generation. Millennials who are looking to use retirement funds to make popular investments can
Contrary to popular belief, Millennials are good at saving their money. Unlike other generations, Millennials spend less on entertainment, clothes, and even dining out. Although Millennials can be better at saving for retirement, according to a recent Forbes article, one important factor preventing them from saving for retirement is a lack of access to employer-sponsored retirement plans. More than two out of three Millennials have not been offered employer plans, according to research from the Pew Charitable Trusts. Of those who do receive a plan, 90% take advantage of it.
The Stock Market – “Scary” and “Intimidating”
As fiscally responsible adults, one would believe that Millennials are putting their retirement plans to work by investing in stocks, bonds or mutual funds. Yet, this isn’t the case, according to a recent Ally Financial survey which reveals 66% of individuals age 18-29 find the stock market to be “scary” and “intimidating – 65% of individuals age 30-39 have the same bleak outlook.
Why are Millennials so scared of the stock market? As children and young adults in 2008, perhaps they are shell-shocked after witnessing the investments of their parents and loved ones depreciate after the financial crisis. Or maybe because the stock market is, in fact, scary and intimidating, even for experienced investors.
Popular Investments for Millennials
Whatever the reason, the Self-Directed IRA gives Millennials an opportunity to completely avoid the stock market and use their retirement money to make investments they better understand. Additionally, the Self-Directed IRA allows Millennials who do not receive a company 401(k) to save for their future. Here are four popular investments Millennials can purchase sans trepidation.
Investments You Understand
Most investors believe they have to use retirement funds to invest in bank CDs, mutual funds, the stock market, etc., but this is far from true. The IRS does not state what investments you can make with your IRA funds, only the investments that are prohibited. These are known as the prohibited transaction rules, which are few. The IRS does not approve the use of retirement funds for the purchase of life insurance or collectibles. Additionally, the IRS views transactions with certain people to be inherently suspicious and, as a result, not allowed. People you cannot engage with using retirement funds are known as “disqualified persons”. You, as the IRA owner, are the number one disqualified person.
Aside from these few exclusions, generally any investment that is legal on a Federal level is permissible.
The Future – aka, Technology
If there’s one thing Millennials know better than boomers and Gen Xers, it’s how to dress an avocado toast – and technology. Among current Millennial investors, the permanency of technology isn’t lost on them, and its accelerated growth over the years is an investment opportunity they don’t want to miss up. Just look at cryptocurrency. According to a recent eToro survey, Millennials have more confidence in cryptocurrency exchanges than the stock market.
With the recent surge of crypto coins, such as Bitcoin, and Facebook’s introduction of Libra, cryptocurrency may become the future of our economy.
Your Personal Interests
There is a new trend among Millennials called “social investing”, also known as socially responsible investing (SRI). Essentially, investors use their retirement funds to make impactful investments for social change, such as the promotion of human rights, or alternative energy. The Self-Directed IRA can help you better invest in your personal interests with retirement funds.
Because 2/3 of Millennials in the workforce do not receive an employer plan, why not establish a Roth IRA? The Roth IRA is funded with after-tax dollars, meaning you don’t receive an upfront tax deduction, but you will benefit when you take a qualified distribution at age 59 1/2, which is completely tax-free. As a Millennial, age is on your side, and in the case of a Roth IRA, the younger you are, the more time your investments can grow tax-free. As a generation of great savers, Millennials can truly appreciate the Roth IRA, as there is no minimum contribution requirement. In other words, you can contribute as much as you want to the plan. Get started with the Self-Directed IRA by contacting a reputable trust company.
Get in Touch
Learn more about popular investments for Millennials, as well as other investment/retirement advice by joining our free monthly newsletter, The Retire Wire. To get started with the Self-Directed IRA, contact IRA Financial directly at 800-472-0646. You can also fill out a contact form to speak with a specialist or get started with the free IRA Financial app.