‘Facebook generation’ makes investing tough

CEBU, Philippines - Millennials are more capable to invest given their young age but because of the so-called "Facebook" generation, they are most likely driven to spend loosely, according to chartered financial analyst April Lynn Lee-Tan.  

Tan, who is also head of research at stock brokerage firm COL Financial, said: "Being in the 'Facebook' generation, some might also be in a rush to buy the coolest stuff like gadgets and clothes or going through cool experiences — eating in a new and expensive restaurant or traveling to trendy places — rather than prioritizing saving and investing.

Some Filipinos tend to succumb to peer pressure, pushing them to spend carelessly.

However, Tan also noted the improving reception among the young people when it comes to investing.

"While not all have an investing mindset, those who are serious about financial planning and security are more open to the idea of buying stocks and mutual funds as investments since they never enjoyed the high interest rate environment in the Philippines that the baby boomers experienced," the financial analyst told The FREEMAN.

For young people, investing may usually be the last thing that comes in their mind.

But little did they know, it's the investments they make at their younger years that will actually help millennials in their senior years. 

When investing, Tan advised to think long-term to maximize the power of compounding and that constantly setting aside at least 10% of their income as investments is the ideal thing to do.

But in order to do this, young people should adapt the "delayed gratification" mindset.

"Don’t try to buy stuff to please or impress other people. Prioritize yourself and your future," the financial analyst said.

"It seems like millennials are all in a rush to make a lot of money so they want to get rich quick through high paying jobs," Tan said.

The financial analyst advised that the "size" of the pay check should not be the only consideration when looking for a job.

"Opportunity to learn, expand network and create relationships, doing a meaningful job, work-life balance should also be taken into consideration. These short-term sacrifices pay off over the long-term," COL's Tan said.

"Given their young age, they can afford to set aside a bigger portion of their portfolio in the stock market either through equity funds or individual stocks. The share should shrink as they become older. This is true for all generations, not just the millennials. The general rule is, the younger the age, the higher the exposure to riskier investments such as stocks," Tan further explained.

Investing in the stock market at a young age will boost the chances of young investors to make more money because of their long investment horizon, unlike if they start to invest at a later time in their lives.

Investing early will also allow investors to understand better the trends in the stock market.

Young investors are in the best position to potentially increase their wealth and ride the ups and downs of the market.

Investing in stocks allows people to become shareholders of listed companies, wherein shares they invest into have the potential to grow over the long-term given they choose companies that are earning well and stable and apply diversification in their portfolio. (FREEMAN)