The Beginner’s Guide to Investing

Younger Americans aren’t investing in the stock market—researchers think this is why

Here's how much the U.S. stock plunge costs the world's richest people
Here's how much the U.S. stock plunge costs the world's richest people

If you go about it carefully and follow the advice of the experts, investing in the stock market can pay off. A $1,000 investment in Apple 10 years ago, for example, would be worth more than $7,000 today. A $1,000 investment in Amazon would be worth more than $19,000. You don't need to pick individual stocks, either. Putting your money in mutual funds or a 401(k) could even help you become a millionaire in as little as 18 years.

But still, according to a new poll from Gallup, less than half of young Americans are putting their money in stocks. Researchers point to the 2008 market crash and the market's latest volatility as the main reasons why.

"After the crash of 2008, when the Dow Jones fell more than 50 percent from the end of 2007 to mid-March 2009," Gallup notes, "the ranks of those under 35 owning stock shrank steadily for the next several years." Even "a decade after stockholders lost trillions of dollars, younger Americans are still leery of investing their money in stocks."

Gallup Economy and Personal Finance Poll (Younger Americans Less Likely to Invest In Stocks )

According to the poll, 52 percent of adults under 35 say they owned stocks in the seven years leading up to the crash. By 2017 and 2018, only 37 percent did. By contrast, an average of 66 percent of Americans over 35 invested before the crash, and though the share is lower now it's still at 61 percent.

The percentage of young adults owning stocks did reach a high of 43 percent between 2015 and 2016, but "the past two years have seen a drop as the market showed strong growth but considerable volatility — including some major declines this year," reports Gallup.

The drop in stock ownership since the crash does not vary greatly by gender or education for young people, but there are some differences in income, with the greatest changes occurring among those with annual household incomes of between $30,000 and $75,000.

Gallup Economy and Personal Finance Poll (Stocks Rank Second as Best Long-Term Investment)

Many millennials are still hopeful, though. About a quarter of those between 18 and 34 ranked stocks and mutual funds as their No. 1 long-term investment option, higher than savings accounts, CDs, gold and bonds. Real estate ranked highest, with 32 percent of respondents ranking it as their top choice.

That's a common misconception: Returns on the residential housing market are "not making anybody rich," says certified financial planner Eric Roberge. "You're barely keeping up with inflation, not to mention all of the costs that go along with owning a home."

A study from London Business School and Credit Suisse finds that, after adjusting for inflation, housing offered returns around 1.3 percent per year from 1900 to 2011. The average annualized total return for the S&P 500 index over the past 90 years, meanwhile, is 9.8 percent.

If you're thinking of investing, experts suggest keeping a level head even during times of market volatility. And while "there is not a one-size-fits-all answer" for handling the uncertainty, Greg McBride, chief financial analyst at consumer financial company Bankrate, tells CNBC Make It that a well-balanced and diverse portfolio can help mitigate risk.

Investing experts Warren Buffett, Mark Cuban and Tony Robbins suggest beginning with index funds, which hold every stock in an index, offer low turnover rates, attendant fees and tax bills, and fluctuate with the market to eliminate the risk of picking individual stocks.

And have patience: "The stock market is a long-term investment, it is not a get-rich-quick scheme," McBride says. "You have to have the discipline to hang in there when markets get volatile. Over time, you are rewarded for that risk with high returns, but you [have to] hang on through thick and thin."

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Video by Andrea Kramar

Investing in these stocks would have made you rich by now—here are other ways to invest your money
Investing in these stocks would have made you rich by now—here are other ways to invest your money