Slumping Stock Market Provides Opportunity For Young Adults

FAYETTEVILLE, Ark. -- As the stock market has plummeted over the last few months, many retirement and 401(k) accounts have been severely depleted. Some people close to retirement are close to panicking, but those that are still in the early stages of professional life may eventually see the recent declines as good things.

"I put the mass majority of it in a long-term account," said Grant Mason, a 23-year-old student at the University of Arkansas.

Mason said he put most of an inheritance into retirement savings accounts. Over the last six months, those investments, like so many others, have taken a beating.

"I haven't looked at it here a lot lately because it usually makes me sad," Mason said.

But for many people Mason's age, the recent bad times could translate into good times down the road.

"If you're young and just getting started in your career, then the fact that the market has dropped so precipitously means that in the long run, your 401(k) might have a much greater gaining potential," said Jeff Cooperstein, an economist at the University of Arkansas.

Many economists said with the stock market so low, the ceiling on investment growth is now higher than it was just one year ago. Most predict the economy will hit its bottom in the next few years, if it hasn't done so already. After that happens, another boom, or at least some modest gains, are likely.

"If you've got a diversified 401(k) and you've got a long time horizon, then there's no reason to think that the U.S. economy isn't going to be doing fine again over the long haul," Cooperstein said.

For that reason, many economists are urging young people to start saving now in order to maximize the return on those investments. They said if you have the opportunity to start a 401(k) or other type of savings or retirement account, now is the time to do it.

Mason said he's ready to start buying stocks at their current discounted levels if it means a health retirement in a few decades.

"If I can just enter a few of the better companies while they're down, give a few more years to get back up, and I should have a good return on my investment," Mason said.

Not everything in the current economy is positive for young adults. First of all, many employers are cutting back on benefits, including 401(k) accounts, making saving for retirement less feasible. Many young people now don't have enough disposable income to divert any of it into savings. There are also fewer jobs in general, a particularly difficult environment for recent college graduates to break into.