7 stupid things people do with their money that feel smart at the time

Being conservative with your investments in your 20s.

REUTERS/Lucy Nicholson

Millennials aren’t investing in the stock market, largely because they’re scared they don’t have enough money, or the knowledge to make the right investments.

“No one can time the market, so know that if there is a decline, it’s going to bounce back. Over time, being in the market pays off more so than staying out of it,” Michael Solari, a certified financial planner with Solari Financial Planning, told Business Insider.

In short: A risky investment when you’re young has time to correct itself. Try a target date retirement fund, sometimes known as “set it and forget it” investments, which adjust their asset allocation and risk exposure based on your age and retirement horizon. Early on, when the need for that money is still a couple decades away, the fund will adopt a more growth-focused strategy. As you ripen toward retirement, it dials back the risk.

You may not get the average annual return of 11% in your target date fund — given you’ll be invested in a blend of stocks, bonds, and alternative assets — but if you get even 6% per year, an original $10,000 investment will be worth more than $32,000 in 20 years without you having to do a single thing. Compare that with $12,200 in your high-yield savings account or $10,020.20 in your traditional savings account.