Inflation has had its toll on everyone, leading to increased fuel prices, rent, and abnormally high living expenses. It has put a lot of people in a tough situation where they have to choose between paying their bills or saving up. Because of this dilemma, it is reported that around 1 in 5 consumers has shut down their investing brokerage or trading accounts over the past 12 months.
However, the shocking fact is that 21% of the people who have opted to close their accounts are millennials and Gen Z, which means it is mostly this demographic that is no longer entertaining investing accounts. This comes as a shock because millennials and Gen Z are considered to be the newer generations who are far more financially smart than those before them since they have all the relevant knowledge at their disposal. So, the questions are: is this the right step to take? Should you do the same? The answer? No. If you want to know why this is a bad move then keep on reading.
Selling Out Is Not The Way To Go
Many investors are selling their assets as a way to help cover the additional costs that are coming in due to inflation, even though they might not have an emergency fund to help them during times of need. Kyle Newell is an Orlando, Florida-based certified financial planner who shined a light on the situation and stated that a lot of this selling of assets comes as an emotional response because of the stock market volatility. And, generally, it is the younger people, with relatively less experience, who are withdrawing their investments.
People often find themselves in tough situations when they are surrounded by news that has nothing to tell except to incite fear regarding the economic situation. This results in panic, which eventually leads to people selling their assets. However, it may seem like the right decision at that time but later on, it may turn into a regret.
Regret May Follow
According to a study from MagnifyMoney, 23% of millennials and 15% of Gen Z wished that they had invested more often. The survey also revealed that around 15% of the people from both groups regret selling their investments. Newell mentioned how inflation, stock market crash, and geopolitical conflicts are a part of the economic ups and down and it shouldn’t deter anyone from not investing and withdrawing their investments.
When you invest your hard-earned money, think of that investment as a tree that would take its sweet time before it can bear fruit.
