Here’s how young people can overcome their fear and start investing

When Tyler Huck graduated from college in 2008, it was smack in the middle of the financial crisis.

That shaped his views on money and investing.

“I saw friends, family lose heavy money on real estate,” Huck said. “I saw parents lose heavy money on their stock investments inside IRAs and 401(k)s.”

“My first real exposure to the market as an adult going into the workforce was negative,” he added. “It was fear and panic and it was tough to get a job at that time.”

A marketing major, Huck eventually landed a job as a teller at a local bank. Now, at 33 years old, he’s the private chief financial officer for Oxygen Financial, a financial advisory and wealth management firm specializing in Generations X and Y (also known as millennials).

His advice: start saving now.

“The rising cost of health care, mixed with the fact you will not have your retirement supplemented by a pension and potentially Social Security, it’s going to be on your shoulders to save the brunt of your retirement [income]”, said Huck, who also hosts a finance and careers podcast for millennials called “They Don’t Teach You This.”

Retirement is something many millennials feel unprepared for.

In fact, even affluent members of that generation are worried — 39% expect to be forced to work beyond retirement age, a new survey by Investopedia found. The investing education website, in partnership with Chirp Research, surveyed 844 affluent millennials, ages 23-38, through an online survey. The median income for the survey was $132,473, compared to the median household income of approximately $71,400 for the generation as a whole, according to Pew Research.

Of those surveyed by Investopedia, 36% said they should be investing more.

“The lack of knowledge and the lack of education makes them fearful and makes it feel very risky to them,” said Investopedia’s editor in chief, Caleb Silver.

To overcome that fear and start investing — or to simply get smarter about how you are doing it — there are several steps you can take.

Start putting money aside for your retirement now, whether $50, $100 or $125 a paycheck, said Silver.

“Pay yourself first,” he said.

If you work for a company that offers a 401(k) plan, take advantage of it. Some employers also offer matching contributions, which is essentially free money towards your retirement.

“These plans are great behaviorally because once the contribution is set up, it is automatic and a hassle to change,” said certified financial planner Cathy Curtis, founder and CEO of Curtis Financial Planning in Oakland, California.

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When you contribute regularly, dollar-cost-averaging comes into the equation, she added.

In other words, “the contributor will buy more shares when the price is low and less shares when prices are high, so average returns will be higher over the long term,” explained Curtis, a member of the CNBC Digital Financial Advisor Council.

Roth individual retirement accounts allow your money to grow tax-free, since the contributions are made after tax — unlike 401(k) plans or traditional IRAs.

There are income limits. If you are married and have a modified adjusted gross income of $203,000, you can’t contribute to a Roth. If you are single, you can’t contribute to it if your income is over $137,000.

You can contribute a reduced amount if, as a couple, your income is between $193,000 and $203,000 or, if you are single, your income falls between $122,000 and $137,000.

Curtis likes Roth IRAs, especially for younger people.

“Even though they are best used as retirement plans — letting the money grow tax-free for decades, they have flexibility,” she said. “If a person really needs the money, if they follow the rules, they won’t pay tax on the withdrawal.”

Your after-tax contributions can be taken out at any time without penalty. However, it’s a different story for withdrawing investment earnings.

After you hit age 59½ and have funded the account for a least five years, you can start to make withdrawals without any penalties.

Since millennials do almost everything online, using an app could be a good way to start socking away money, even in small amounts, Curtis suggests.

There are a number of investing apps available — from newer disruptors, like Acorns and Robinhood, to those from big banks, like J.P. Morgan Chase.

Still afraid of dipping your toe in the water or diving deeper? You can overcome that fear by making sure you are invested in a diversified portfolio, including bonds, Curtis said.

Bonds offer your portfolio some protection when the stock market goes down — so if you are highly risk intolerant, don’t put most of your money into equities.

In fact, if you start early, a 60/40 stocks-to-bonds portfolio mix can do quite well over the long term, said Curtis.

“Volatility is what scares most people, but volatility is temporary and is the price investors pay to get the better returns that stocks provide,” she said.

If you have money in a 401(k), IRA or some sort of index fund and are looking to invest in individual stocks, then look at names that have a product or service you enjoy, said Oxygen Financial’s Huck.

“It gets you excited about saving money,” he said.

Don’t worry if you are just starting now. It’s not too late.

“The best day to start investing was yesterday,” said Investopedia’s Silver. “The next best day is today.”

Curtis agrees. She suggests making up for lost time by cutting out a discretionary expense, like a new pair of shoes or weekly restaurant dinners, and investing the money instead.

Also, if you haven’t maxed out your 401(k) contribution, increase it by a percent or two and “not even feel the pinch,” she added.

“I know people who didn’t start investing until their 40’s who are doing fine now,” Curtis said. “But they could be so much further ahead and have more options later in life if they start early.”