Millennials: Don't Let An Oversized Rainy Day Fund Keep You From Investing

It may be prudent to save up just in case you run into a tough 6 months, but it's also smart to start investing for the long term as soon as possible.

Here's a story I've heard told in many variations over the past few years. In one, there are twin brothers -- let's call them Charles and George -- who each get jobs at 22 at the same company for the same salary. They are immediately faced with the decision of whether or not to start tossing money into their retirement funds. Charles elects to make a 5% salary contribution to his 401k. George elects to stick all his extra cash in a rainy day savings account in case things go awry.


Ten years later, George realizes he's way behind on his retirement and starts contributing the same 5% as Charles. When the brothers reach retirement age, Charles has been contributing to his 401k for roughly 40 years, George for about thirty. That ten-year gap doesn't seem like much on the surface but because of the way compounding interest works, Charles will have saved over twice as much money as his brother.

The moral of this story, aside from teaching a way to show up your brother, is that young people need to take advantage of the distance in years between the present and the point in the future at which you'll need to start drawing from your retirement account. It may feel prudent to amass a weighty rainy day fund lest you lose your job at 25 but the long-term cost of that prudence could be the difference between living comfortably and living uncomfortably when 2055 roles around. 

The importance of saving for the long term versus saving for the short term is one of several tips offered up by Forbes contributor Alexandra Talty in a piece up on that site right now. Be sure to check it out if you're a fellow millennial in need of a rough crash course on savings and investments. Let us know in the comments if you have a different take on the issue.

Read more at Forbes

Photo credit: Andrey_Popov / Shutterstock

For more on millennial issues, check out the following video featuring Pew Research's Paul Taylor

Related Articles

How does alcohol affect your brain?

Explore how alcohol affects your brain, from the first sip at the bar to life-long drinking habits.

(Photo by Angie Garrett/Wikimedia Commons)
Mind & Brain
  • Alcohol is the world's most popular drug and has been a part of human culture for at least 9,000 years.
  • Alcohol's effects on the brain range from temporarily limiting mental activity to sustained brain damage, depending on levels consumed and frequency of use.
  • Understanding how alcohol affects your brain can help you determine what drinking habits are best for you.
Keep reading Show less

Scientists sequence the genome of this threatened species

If you want to know what makes a Canadian lynx a Canadian lynx a team of DNA sequencers has figured that out.

Surprising Science
  • A team at UMass Amherst recently sequenced the genome of the Canadian lynx.
  • It's part of a project intending to sequence the genome of every vertebrate in the world.
  • Conservationists interested in the Canadian lynx have a new tool to work with.

If you want to know what makes a Canadian lynx a Canadian lynx, I can now—as of this month—point you directly to the DNA of a Canadian lynx, and say, "That's what makes a lynx a lynx." The genome was sequenced by a team at UMass Amherst, and it's one of 15 animals whose genomes have been sequenced by the Vertebrate Genomes Project, whose stated goal is to sequence the genome of all 66,000 vertebrate species in the world.

Sequencing the genome of a particular species of an animal is important in terms of preserving genetic diversity. Future generations don't necessarily have to worry about our memory of the Canadian Lynx warping the way hearsay warped perception a long time ago.

elephant by Guillaume le Clerc

Artwork: Guillaume le Clerc / Wikimedia Commons

13th-century fantastical depiction of an elephant.

It is easy to see how one can look at 66,000 genomic sequences stored away as being the analogous equivalent of the Svalbard Global Seed Vault. It is a potential tool for future conservationists.

But what are the practicalities of sequencing the genome of a lynx beyond engaging with broad bioethical questions? As the animal's habitat shrinks and Earth warms, the Canadian lynx is demonstrating less genetic diversity. Cross-breeding with bobcats in some portions of the lynx's habitat also represents a challenge to the lynx's genetic makeup. The two themselves are also linked: warming climates could drive Canadian lynxes to cross-breed with bobcats.

John Organ, chief of the U.S. Geological Survey's Cooperative Fish and Wildlife units, said to MassLive that the results of the sequencing "can help us look at land conservation strategies to help maintain lynx on the landscape."

What does DNA have to do with land conservation strategies? Consider the fact that the food found in a landscape, the toxins found in a landscape, or the exposure to drugs can have an impact on genetic activity. That potential change can be transmitted down the generative line. If you know exactly how a lynx's DNA is impacted by something, then the environment they occupy can be fine-tuned to meet the needs of the lynx and any other creature that happens to inhabit that particular portion of the earth.

Given that the Trump administration is considering withdrawing protection for the Canadian lynx, a move that caught scientists by surprise, it is worth having as much information on hand as possible for those who have an interest in preserving the health of this creature—all the way down to the building blocks of a lynx's life.

Why cauliflower is perfect for the keto diet

The exploding popularity of the keto diet puts a less used veggie into the spotlight.

Purple cauliflower. (Photo: Shutterstock)
Surprising Science
  • The cauliflower is a vegetable of choice if you're on the keto diet.
  • The plant is low in carbs and can replace potatoes, rice and pasta.
  • It can be eaten both raw and cooked for different benefits.
Keep reading Show less