Mention the words stock portfolio or investments to a Millennial and you will likely be greeted with awkward silence or a vitriolic gaze. And for good reason. Many watched as the 2008 recession gutted their parent’s life savings in a matter of days. Hell, I watched my teenage home value (albeit inflated) plummet from $600,000 to less than $300,000 (we ended up foreclosing).
This mistrust of the system mixed with a tightening and increasingly automated job market, low wages, and student loan debt makes for a misguided cocktail every hipster is ready to pound at Sunday brunch.
So how do you start getting young people to think about investing?
Overhaul The Experience & Meet Us Halfway
The problem with most investment platforms is that they archaic, hard to understand, and often require a high barrier to entry. They simply do not mesh with the wiring of a young person’s brain or the daily experiences and interactions they have with other technology on a day-to-day basis. Access must be mobile-first and simplicity a cardinal rule.
Robinhood to the Rescue
Robinhood is an iOS and Android app that allows anyone to buy and sell stocks with zero fees. Seriously, that’s it. And zero fees really means zero fees.
This kicks major brokers who charge up to $8 per trade squarely in the teeth. No complicated, buzzword-laden platforms to navigate, no visits to Margaret the 48-year old broker or worse — Byron, the handsome dude with a pompadour, five years your younger, who rakes in an annual salary three times what you will earn in a lifetime. Margaret is tolerable, but Byron can go sip Hemlock atop a high-rise condo while clutching his French Bulldog. Launched in 2014, Robinhood combines beauty and a no-frills approach toward stock trading to create a mobile experience that is digestible and a wonderful introduction to what has largely been disorienting, if not scary, concept for the average person. The app is dead simple to use, presents information thoughtfully, and has a signup process that takes less than five minutes.
How to Pick Stocks When You Don’t Know What You’re Doing
- No penny stocks (tell your Uncle Raymond he’s an idiot)
- No mutual funds
- No pre-IPO shares
- Companies actively listed on major U.S. exchanges only
While these may seem like a lot of “rules,” it is with great purpose: to protect you from overly risky investments.
Find Stocks That Have a Proven History of Growth and Future Potential
Welltower growth
Picking stocks is only hard if you make it that way. One of the first companies I put any significant amount of money into is Welltower, a senior living REIT, a type of security that invests in real estate through property or mortgages and often trades on major exchanges like a stock.
Here are the main things I asked myself:
- What service impacts a significant portion of the population and is a necessity? Senior care and housing, sweet. My Nonni will love me for this!
- Which company in this sector is a leader or dominant force? Welltower has a market cap over $25 billion.
- Who pays dividends? Welltower has paid quarterly dividends since 1987 and has consistently increased that payout ever since. It currently pays $0.86 per share every quarter.
- How do they fair in an economic downturn? Welltower wasn’t crushed by the 2008 collapse, but it definitely took a ding.
In January 2011, the oldest post-World War II baby boomers began turning 65; since then, roughly 10,000 boomers have celebrated their 65th birthday every day.
By the time the last of this generation approaches retirement age in 2029, 18 percent of the U.S. will be at least that age.
There was a whole lotta humpin’ after WWII.
It isn’t rocket science to see there is a large, steadily increasing percentage of the population who will need a specific service or product for years to come. This fact, coupled with the criteria above, led to my decision. And we still haven’t even begun talking about the rest of the world’s aging population (which Welltower serves)…
Start With Your Heart (and common sense)
To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. You must supply the emotional discipline.- Warren Buffet
You’re probably thinking to yourself that I’ve lost my damn mind and my advice to “start with your heart” is directly at odds with Mr. Buffet’s statement. In truth, it isn’t and here’s why:
1. Buffet is referring to the emotional reactions you will undoubtedly face after you have begun investing. That is to say, will you sell off your entire holding in Facebook because Mark Zuckerberg got caught punching an Alpaca and is being forced to resign? Or will you keep your wits, weather the storm, pay attention to the current health of the company, and its direction? Okay, maybe Zuck can go hang with Byron in this case.
2. By starting with your heart, you are investing in companies you truly believe in. Does cheating on your wife or girlfriend depend on your ability to send unwarranted, disappearing penis pics? You may consider Snapchat.
The first company I ever bought stock in was Taser (now Axon). Yes, Taser as in the BZZZZZZ electrified, make you urinate (or defecate) your pants weapon used by police. Almost every day we hear about police shooting unarmed humans dead in the street and their homes.
For me, this is simply unacceptable and I wanted to put my money toward something non-lethal that will hopefully change the shocking number of officer-involved murders.
While I feel Axon is a step in the right direction, that is not to say it isn’t devoid of flaws. Reuters documented 1,005 incidents in the United States in which people died after police stunned them with Tasers, nearly all since the early 2000s.
Another factor that led to my decision was that Axon started selling body cameras and online file storage in 2008. The demand has been increasing as public pressure continues to swell for holding officers responsible for their actions. What could possibly go wrong, right?
Conclusion
Author’s Robinhood Portfolio
I started this journey in January 2016 with a few hundred bucks. Whenever I had extra money laying around, I’d invest a bit more. Am I a millionaire? Hell no. And that’s okay. I’ve put fear aside (check those emotions at the door) and dipped my toes into a world that too many are scared of — after all, only 9% of Millennials describe themselves as investors.
I’m learning along the way and am currently beating the average annual S&P return with investments in companies that represent strong performance and growth potential, as well as believing in them morally.
Some parting advice if you decide to start investing:
- You’re not and likely never will be Wolf of Wall Street — chill out.
- Don’t check the health of your stocks every day. You will drive yourself mad and there’s zero purpose or benefit. At most, give it a 6-month or annual evaluation.
- Whatever money you put in, consider it gone. This is tough at first, but if you can train your mind that this money is no longer yours, you will be much better off in the long run. It helps remove the emotion and sets you up for the long term (AKA the smart play — just ask Mr. Buffet).
- Remember to do your taxes, dummy. This past year I got them professionally done for the first time. I use Taxfyle (promo code: FYLE-VINCEA0G will get you $20 off) and I could not have had a better experience.
Godspeed, you filthy capitalist scum! — — DISCLOSURE: I own stocks in the two companies referenced in the article; Welltower Inc. and Axon Enterprise Inc. While I was not paid to write this article (wouldn’t that kick ass?), I do get one free stock if you sign up for Robinhood.
I write other nerdy stuff like this @ nerdyminutes.com!