Calling all millennials: How much of your money is in equity or invested somewhere? Sure, there may be a savings account in a mutual fund somewhere nice and safe that your parents set up for you on your 18th birthday, but knowledge about investing and the stock market isn’t as widespread as you’d think. In fact, a recent study found that less than half of affluent (i.e. money-making, employed and educated) millennials feel knowledgeable about investing at all. That includes setting aside money for retirement. While knowledge about how to navigate the stock market is nebulous, there’s also a gap in how to acquire knowledge, and 21 percent of non-investors say that they don’t invest because they don’t trust financial advisors or stockbrokers.
Still, millennials have the most opportunity on their hands (Gen Z, too) to make a killing in the stock market if they invest sooner rather than later. It’s a long game due to the compounding effect. So, for millennials who don’t yet have the knowledge or understanding to get started in investing in a major way, here are four fun ways to dip their toe in and understand how it works. Who knows? Beginning with one of these steps today may make you a fortune later.
1. Use a DIY platform
There are many investing platforms that can create personalized investing portfolios so you can learn as you go. Take Ellevest, which features 21 asset classes and creates a portfolio based on the amount of risk you want to take. For female-identifying millennials, this is a great first place to get started, because you can invest as little as $20 and add a recurring contribution and edit your timeline as you go. Platforms like this help you experiment within your budget, allocating your money in different ways to reach your goal and learn simultaneously.
2. Invest in something that interests you
Big investing buzzwords can be intimidating at first, which is all the more reason to invest in something you’re already familiar with, so it feels less foreign. This will create a sense of personal investment and interest, too. This could span from investing in a friend’s Kickstarter for a product you believe in to using a platform like Vinovest, which allows users to buy and sell fine wine without having to store the inventory in their homes.
At the same time, an investment of this type can be fun and different — a conversation starter. Already having an interest in one industry sector or type of product can also incentivize further research on the topic, which can only pay off as far as investment decisions go.
3. Invest in something that’s part of a global conversation
Investing in something like cryptocurrency can be another learn-as-you-go alternative. Many millennials enjoy taking part in the conversation around the different types of cryptocurrency on Reddit and Twitter, where they can crowdsource information, make friends and educate themselves in a more social way. Apps like Coinbase make this easy, where everything from Bitcoin to Ethereum is available to purchase and sell at a moment’s notice, which is how many millennials begin to play with trading. These are valuable skills that can translate to the stock market later on.
4. Do a convertible loan
Each of these four ideas provide an educational glimpse into the world of investing, with a slightly smaller margin of risk for beginners. The best way to learn is through doing, so millennials just need to start playing with their disposable income to learn the ropes.
The nature of a convertible loan means that a term is created for a loan for a startup or business, and the loan will be returned with a small interest fee, with the option to turn the debt into equity. For millennials in the startup sphere interested in business or working in venture capital, this is a great way to begin the process of startup investing while also giving the startup a year to perform before deciding whether to invest or take back their loan money with the small interest rate accrued. This can also be a great opportunity to learn about key terms and KPIs regarding business growth and what investors should look for in startup performance.