Who today are from 18 to 35, they know they are part of this generation, tends to leave their savings (usually small amounts) parked in current accounts or deposit accounts. However, the low returns offered by these investment solutions and the related costs make the gain almost nil, exposing the deposit to the inflation tax.
The good news is that the culture of saving is still widespread in our country and the new generations are not exempt. According to the precious study that every year the Einaudi Foundation publishes on the topic, more than 90% of those interviewed in the age group between 18 and 34 recognize the positive value of filling the piggy bank.
Unfortunately, this awareness is almost never transformed into an active approach: if, for example, most young people are aware of the risks associated with their retirement – the Einaudi Foundation still explains – only very few have asked a professional for help to understand which it will be their fate. Are you among these?
Step #1 – Save Money
If you have the chance during this 2019, it would therefore be a good idea to start saving. Even a small monthly contribution, a small sum, (maybe 10,000 dollars or even more substantial quantities of course) may over time become the first brick for a more stable financial future and lay the foundation for the purchase of a home, the growth of children or simply to protect yourself for your retirement (for more information on this topic, see our analysis on supplementary pensions).
It’s true, for many young people there are many expenses and money never seems to be enough. For someone, saving is certainly difficult if not impossible. In many other cases, however, a simple rationalization of their expenses could reveal unexpected surprises.
By nature we are not inclined to evaluate the daily expenses and earnings as a whole. A rational view of our incoming and outgoing flows would help us to have a clearer view of our personal budget, or how we spend money. Think of a company: it would be impossible for any accountant to have control of the situation without putting black and white entries and outputs into a table. The same is true for you. If you can get a general overview, you will find that over time you regularly share a portion of your revenue to a limited number of items.
Earning this knowledge is the first step to understanding how you can reduce your excess expenses by going to attack cost items individually. For example, you can evaluate how much you spend on gasoline every month, or how much of your budget dissolves in cafes or restaurants.
Being aware of these figures will not only give you the opportunity to understand where you can cut something, but it will also help you optimize your outputs. You might find, to give another example, that avoiding the lunch break at the bar once or twice a week (perhaps bringing some fruit from home) you can cover the costs of a dinner for two on Saturday night, saving what you would still have spent to give it to us.
I know it sounds like a complicated concept, but trust me that once you have made the effort to consider the costs of your daily life in relation to your budget, you will make these considerations natural and, through this simple mental discipline, you will be able to educate yourself a healthy culture of saving (which is very different from a culture of deprivation, is clear).
Fortunately, today there are many tools that can help you make this journey easier, giving you the ability to monitor your outputs over time.
Step #2 – Right Strategy
Once you have identified a share to be allocated to savings and perhaps with the help of a small starting capital, a graduation or birthday present, it is time to evaluate the solution to enter the market.
A good strategy for 2019 could be to organize a CAP (Capital Accumulation Plan) that allows you to increase your investment gradually through recurring payments. This solution gives you great flexibility and leaves you the time to get familiar with the markets, giving you the opportunity to plan over time a larger investment, maybe even 20,000 dollars.
If you are a novice investor, it is normal that you are intimidated by the world of finance and the risks associated with it.
A widespread belief is that financial investments are a high-risk activity or reserved for experts. Today, thanks to technology, asset management services, once dedicated to large capital holders, have become accessible to everyone.
You must then remember that investing does not necessarily mean playing on the stock market, leaving your savings at the mercy of the tide of markets. Today there are instruments like the ETF that allow to contain risks through diversification. The ETF are baskets of securities whose trend is linked to that of another index such as a stock exchange or a raw material.
Opening an asset management in ETF would allow you to …
- Diversify your investment (investing in different assets allows you to balance any losses in a class of securities with gains from another)
- Costs significantly lower than other solutions (passive management reduces costs compared to active management)
- Reduce the risks
These features are perfect for those who want to set a long-term investment strategy. In fact, it is proven that over the long term, the ETF perform better than the strategies that take great risks to exploit the daily trend of the exchanges.