Thanks to factors like economic uncertainty, market volatility, and political affiliation, young investors tend to be more conservative than they should be.
In fact, a 2024 Allianz survey found that 58% of millennials report making “changes to their investments to make them less risky or more conservative, compared to 46% of Gen Xers and 41% of boomers.” Additionally, 68% of millennials reported that they want to add more protection to their portfolios due to recent market volatility, compared to 60% of Gen Xers and 47% of boomers.
However, this overly conservative approach can mean missing out on market opportunities.
Why Start Investing Early & Often?
The younger an investor starts investing, the more opportunities they have to capitalize on dips in the stock market. During times of volatility, it can be difficult to see the longer-term opportunities. But over longer horizons, stocks have outperformed bonds and cash.
Young investors are in a position to rebound from market shocks, as illustrated by the graph below. There have been three recessions (in gray) over the last 30 years, but the price of the S&P 500 has increased from 459.11 to over 5,000 as of April 15, 2025.
By investing early and regularly contributing to your accounts, you can build a larger portfolio—because there’s that much more time for your money to grow. However, if you continue to wait for the “right time,” you may miss out on significant returns.
As Dow Jones Smart Money notes, “The earlier you start investing, the faster you can grow your money and make it work for you.”
Evaluating Your Investment Needs & Risk Tolerance
Of course, there are reasons to invest more conservatively, such as upcoming large purchases (e.g., life changes like buying a home), uncertainty around employment, and the need for liquidity.
Your risk tolerance must also be taken into account, as panic selling and increased stress from market volatility can lead investors to miss out on buying opportunities. It’s wise to follow the advice of the legendary CEO and chairman of Berkshire Hathaway Warren Buffett, who has said it’s best “to be fearful when others are greedy and to be greedy only when others are fearful.” Understanding the past patterns of the markets can give you the confidence to follow Buffett’s advice.
Simply put, looking at the full picture of your financial health, goals, and the historical market is crucial to helping you achieve those goals.
Are you ready to learn about your risk tolerance, investment opportunities, and how to prepare for your future? Carlson Investments will gladly find an allocation that works for you. Speak with an advisor today!
Carlson Investments does not provide tax, legal, or accounting advice. This content has been written for informational purposes only. Always consult your individual tax, legal, or financial professionals for advice tailored to your situation.
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