How Gen Y Should View the Stock Market Right Now

Younger investors are skeptical about losing value in their retirement accounts right now as the stock market continues to decline.  A 26 year old client of mine, whom I’ll call Mark, recently called me to inquire about his retirement saving accounts.  He said, “Every month I open my statement and see that my account value is down, even after I make my monthly contribution.  Jim, Why am I throwing good money at bad money?” 

I replied by saying, “Mark, I certainly feel your confusion but let me ask you a question; What is your favorite department store to shop at?”  Mark replied by telling me it was Macy’s. 

I said, “Okay, great.  Mark, imagine that Macy’s is having the biggest sale they have had in 70 years and I told you to pick out 8 great outfits.  After you pick out your outfits I want you to go to the check out clerk and tell him to hold the outfits until after the sale at which time you will come back and buy them.” 

Mark immediately asked me, “Why would I do that?”

I replied by telling him that you wouldn’t, but that’s exactly what you just told me you wanted to do with your retirement accounts.  I went on to explain to Mark that right now, the stock market is having the biggest sale it has had in 70 years and if you wouldn’t wait until after the sale was over to buy your outfits at Macy’s, why would you wait until after the sale is over to contribute to your retirement accounts. 

Generation Y needs to take advantage of this sale, since it most likely will never come around again in our life times!  We need to think about “What does it mean for me that right now the markets are discounted?”  Think about it this way and it should ease your view of what most of the media is construing as “negative” right now.  In my opinion, this is a blessing in disguise for Generation Y.