Bruno conceded that young
people face many competing savings goals such as buying a house, paying
for a wedding or their children’s college education, but said retirement
saving should still be factored into a financial plan.
things can be paid with loans, but retirement cannot, which is why
retirement saving must be a priority. A post-graduate with student loans
should still contribute to a retirement plan, she stated. This is not
to say student loan debt should be neglected, but a plan should be in
place to pay off debt while simultaneously saving for retirement. “You
don’t want to necessarily shift away from retirement just to pay off
student loans,” Bruno said.
Young investors might be hesitant to
invest because of market performance in recent years. “Their short
investment horizon has been marked by some volatility,” she noted, but
emphasized that this is typical throughout history.
investors should not focus on market volatility because they are being
exposed to it early and can still bounce back. Worrying too much about
volatility can cause young investors to avoid market risk and expose
themselves to inflation, she cautioned.
Bruno added that young
investors should not try to time the market and chase performance.
Studies show that investors who attempt this have lower performance
than those who pick an asset allocation and stick with it. Portfolios
should be broadly diversified with both U.S. and non-U.S. stocks, she