Are you young and scared to invest?

If so, learn how to get on a better financial path—while time is on your side.

Are you under 33 years old and concerned that you aren’t on the right path to financial security? If so, you are not alone. A recent survey conducted by Fidelity Investments found that a surprising number of young people will not have enough income to meet all of their expected financial needs later in life.

One reason could be the stunning number of young people who are not taking advantage of the potential wealth-generating power of saving and investing. The survey found that, nationally, 42% of twentysomething working households are saving less than 4% of their income.  What’s more, studies have shown that many members of Generation Y (ages 21–33) have either not invested at all, or have shied away from stocks in particular. Indeed, a September 2011 survey found that 40% of Gen Y claim they will never invest in stocks.

This fear of investing in stocks may be understandable, given how the financial crisis sent the market plummeting and joblessness soaring during Gen Y’s early working years. Add to that the high and ever-increasing levels of student debt, not to mention other rising costs of living and uncertainties surrounding the safety net, and it’s no wonder so many young people might be having trouble saving and investing.

But with long futures ahead of them, young people who defer saving and investing in stocks may be doing so at their peril. Consider this: Even with the financial crisis, the dot.com bubble, and other stock market retreats, the S&P 500 has nearly quadrupled since 1990, roughly the lifespan of Gen Y.

Many investment professionals believe that young people who avoid the market out of fear could be shortchanging their financial futures. “Avoiding stocks at such an early age can be a costly decision if you want to grow wealth to do things like buy a car, a house, fund your retirement, or your children’s education,” warns Peter Walsh, institutional portfolio manager with Fidelity. “Fear is not a successful strategy.”

Source:  Fidelity Investments

The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

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