The financial outlook for the Facebook generation is full of promise but not without peril. People are living longer, more active lives, and Generation Y has 40 to 50 years until retirement.
Equities have provided higher returns historically and will continue to do so over the next decades. Investors with a longer time horizon shouldn't be concerned with day-to-day volatility and are the best prepared to benefit from positive long-term returns.
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It's important that this cohort of twenty-somethings invest early and often because there may not be a government safety net (Medicare and Social Security, for example) by the time they need it. This generation must learn self-reliance.
In general, I am comfortable with portfolios invested 100 percent in stocks until the client reaches about 40 years old. Between 40 and 60, it is generally appropriate to introduce fixed-income investments. But choices about how much fixed income and equity volatility a client should have depends on an individual circumstances and resources, and should be decided through in-depth conversations with the investor's financial adviser.
(Read More: Retirement Planning for Generation Y)
People in their 20s will never have a better money-making opportunity than now, but they must learn to pay their bills, save and then spend what's left. Not, pay bills, spend and save what's left. They must develop discipline.