Investing in our future: time and technology

Editorial

There is a famous saying in investing, “time in the market is better than timing in the market.” The bottom line is, the best time to start investing is now, especially when you are young. It has become harder for young adults today to save enough for retirement solely from the interest rates in a savings account. Combine this factor with paying off the student debt most young people bring with them into their working lives.

Most young people think they need to be in excess of money in order to begin investing, but starting small and focusing on investing over a long period of time can be more lucrative than waiting for the perfect time. Hoping for short term gains by taking chances on finding the right low points and hoping to sell at high points is not the best way to begin. Small amounts can grow a lot over time, and sometimes it does not all depend on the amount you can start with but merely starting early and watching your investment portfolio grow for decades.

Another aspect if you start at a young age is that you can afford to make higher risk investments. This is because you have more years of earning and regaining the funds at your hands. The last thing you want is a big loss in your portfolio right before you are planning to retire and as such you would be more likely to stick to low risk, low return investments when you reach that stage. Working towards having a balanced portfolio that is diverse enough to survive through dips in some sectors can also be of major help.

Letting technology do the thinking

Millennials is the first generation to grow up with the internet. They rely on technology to do almost everything whether it is watching movies (Netflix), shopping (Amazon), listening to music (Spotify) and socializing with friends (social media). This is a generation that has faith in the power of technology to solve their problems, and as such, technology will have to grow with them to continue to suit their needs and demands.

Financial technology companies need to take advantage of this and develop their services to offer portfolio advice that has technological solutions. As it is becoming more common for financial companies in general to use AI and algorithms to decide where it’s most suitable to invest, using the same systems to develop tech investment tools that assist with personal investing could appeal to a whole new generation of investors.

Young people today are more likely to download an investment app than to book an appointment with a financial advisor. Since millennials are more impact-driven with their investments as well, using technology to find the most suitable companies or brands to invest in, could not only be a quicker process, but also a much clearer way to do it as AI can scan through more data than a person to provide the best advice.

Essentially, it boils down to having the right tech in place in order to attract the next generation of investors. It is a digital culture and it makes sense for financial tools to continue to develop to make the most of this. Having grown up in a digital era driven by technological advances, millennials have grown up with instant access to information and expect the same for consumer goods.

Last modified: March 1, 2019

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