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For Young, Recession Offers Deals of a Lifetime

For Young, Recession Offers Deals of a Lifetime

Associated Press

The Great Recession has turned into the best of times for young investor Daniel Lee.

Early this year, the 30-year-old salesman in Scottsdale, Ariz., shelved expensive meals and vacation plans and threw “every spare dollar” into the stock market. The value of his portfolio has more than tripled as the market has rallied since March.

“This is like buying a swim suit in the fall or a winter jacket in the spring,” he says. “Get in while it’s a good deal.”

Halfway across the country in Detroit, retiree Irvin Hall, 70, is living through the recession in a different way.

His mutual funds fell 35 percent during the stock market plunge that started last fall and continued for six months, and his monthly pension from General Motors dropped by 10 percent. He and his wife pay more for health care and medicine after the company reduced his insurance benefits.

“It takes your mind a while to really adjust to this,” he says. “You’re expecting, hey, I’m set for life, and then all of a sudden that’s taken away.”

The plight of baby boomers and retirees has been well-documented in the year after the financial meltdown. But for people in their 20s and 30s who have a good job and feel it’s secure, this is the best of times. Many were renters and had little or no money in the stock market. They didn’t take a six-figure hit to the value of a home or 401(k) account. Now they’re positioned to invest at prices no one would have believed during the boom years.

Home prices are down 30 percent, on average, and 50 percent or more in some markets. The Standard & Poor’s 500 stock index is 34 percent below its record high in October 2007.

Young people are benefiting in other ways, too. The Cash for Clunkers program allowed them to trade in beaten-up used cars and buy new ones at a discount. “They’re never going to see that again,” says John Rogin, who owns a Buick dealership in Livonia, Mich.

The Consumer Price Index has recorded a rare drop over the past 12 months – 1.5 percent. And the decline for many goods and services has been much greater, allowing young people to put even more money into stocks and housing.

“This is a historic time,” says George Jaramillo, 35, a business analyst in Atlanta, who recently purchased three homes, including two at foreclosure prices. “It’s a great opportunity to make some great gains in the future.”