Overcome Investor Fear with History
Millennials are afraid to invest in the stock market. Who can blame them?
They came of age during one of the worst economic recessions in our country’s history. They graduated into an economy with high unemployment rates and watched families lose their homes and/or retirement savings. It’s no wonder they are scared and exhibit investment behavior more like those who came of age during the Great Depression than their parents.
The challenge financial advisers face today is to figure out how to get millennials excited about investing. For that, I look to history.
Periods of economic recession have generally produced the greatest innovations. During economic “good times,” companies are not apt to change what made them successful. But when tough times hit, companies and people look for ways to make more with less, which leads to innovation. Each U.S. recession was different in size and duration, but all were solved with innovative thinking that led to new technologies that, in return, led to growth. I believe we are living in one of the greatest periods of innovation and investor opportunity in history.
Let’s take a quick look back.
The Great Depression saw the birth of television, radio, home refrigerators, nylon, antibiotics and the electron microscope. The last global recession, from 1969 to 1982, saw the microprocessor, LCD matrix, pocket calculator, cell phone and PC invented as well as the creation of the Ethernet, Internet and MS-DOS. The dot-com recession in the early 2000s gave us the iPod, “cloud computing” and Internet search engines.
These are just a few examples of the innovation that came from past economic recessions. The financial impact from the investment opportunities created by these innovations was tremendous.
We have already begun to see innovative technologies resulting from the most recent economic recession that have the potential to be as revolutionary as the microprocessor. Inventions like 3D printing, the reversal of aging in cells and holographic interfaces can create tremendous investment opportunities millennials should want to capitalize on.
I believe that reflecting on the past, combined with education about investment options, is a good way to alleviate the fear and doubt of millenial investors. We still face numerous challenges, but strong investment opportunities exist, and more are being created every day by innovative thinkers. Emotions are part of our nature, but millennials would be doing themselves a disservice to allow fear to keep them from building a strong financial future and capitalizing on the innovation brought about by the recession.