Introducing Mike, the Millennial With His Hands Full
Mike, 26, is struggling. He married early and already has a child, and another is due five months down the road. He graduated from a two-year college, has a moderate student-loan burden, and is working. He has, however, seen many laid off in his industry and a few at his company, where everybody at his level cringes any time a company-wide memo appears in his e-mail in-box.
Like Melanie, he is eager to scrimp and save as best he can to build long-term wealth, especially since he can already count the number of years before he’ll have to send young ones off to college. Sometimes, however, good intentions aren’t enough. Michael’s identifiable cash needs are greater than those of Melanie. He is able to put something (not much, but something) aside – it took a lot more intense number crunching for him to figure that out. But with a much smaller margin for error, he may not be able to afford to wait while instances of big market declines transition to recovery. He understands and dislikes the fact that he has to sacrifice potential return in order to protect his downside. But he recognizes the need to do it, and to choose Risk – 1.
The moral of the story: Not every young person can or should be a speculative gunslinger. It depends on the resources and needs of each individual person.