Why Should I Invest?

Younger generations do not invest in the stock market, according to a 2018 survey by Bankrate, an online investment website.

Only 23 per cent of millennials like to invest instead of using cash.

This is primarily because millennials like to spend on their most immediate needs and want to avoid putting their money at risk.

Investing is simply buying pieces of companies- stocks- with which you can own a certain part of those companies.

That stock market is seen as volatile, meaning it can change quickly. Those familiar with the 2007-2009 financial crisis have seen just how quickly the stock market can go down but can also rise again.

According to University of Guelph-Humber Business Studies program head George Bragues, the height of the crisis was the year of 2008. He described the crisis as having started from the U.S. with the Lehman Brothers company that had declared bankruptcy in August 2008, sending ripple effects throughout the global economy. From that point onward, many policies were put into place to make sure that another crisis doesn’t happen.

It has been 10 years since the crisis, and the best time to invest is today, according to Mr. Bragues, referring to it as a successful market.

“Even if 10 years have passed, a lot of  the policies made from the crisis are playing out. The last nine years of the market have been good- it’s a bull economy,” said Mr. Bragues.

Although investing brings a lot of risks, it can also benefit younger generations too. That is, only if you know how to approach it.

Guelph-Humber Business Studies alumni Orest Vesna stresses the importance of doing your homework before investing.

First, he says that you have to be a risk taker. The amount of money that you invest into a stock should be carefully thought out.

Most importantly,  you need to have money saved, that can help you to invest and cover-up for any risk.

Once that’s been established, you need to find the right investment for you. There are many different ways to invest.

Vesna describes investments as a plan, a goal that one works towards.

The most common types of investments are Guaranteed Investment Certificates (GICs), Mutual Funds and Exchange Traded Funds (ETF) portfolios. GICs are  Canadian investments that are guaranteed to return value over a set period of time. Mutual funds are investments by shareholders from multiple companies. ETFs focus on the trends of the stocks and commodities like oil and other assets.

As Vesna says, it depends on the person and their situation. He suggests that for beginners, not only should they do their research but also seek help from a financial advisor. Financial advisors help their clients achieve a certain goal by helping them figure out how much they should invest and where it would be best for them.

Ruchik Patel, a financial advisor at SGI Canada, says “we try to make room for investment in which they are paying taxes and debt, and we make room for them to invest and grow their money.”

He says that mutual funds aren’t volatile- high risks-but stocks are. Mr. Patel also says that saving is key in order to spend that money. He suggests investing into long-term funds, like mutual funds, so that you can maximize your profit over time and avoid high risks with a short term investment.

Mr. Patel says that for a beginner and non-risk takers, GICs are the best investments. GICs don’t involve a lot of risk and also return some profit to you.

Investing isn’t as hard as you think.

All you have to do is research to find the plan that is the right fit for you.