Tim Harford, author of The Logic of Life and The Undercover Economist, believes that young people “should be buying more stocks and running up debts to do so”. He supports this controversial viewpoint with the following:
The logical way to fight generational risk is to borrow money to make large, regular investments in stocks while young, then use a proportion of later savings to pay back the loan rather than to pile into the stock market in middle age. That sounds risky, but it is, in fact, exactly what people do in the housing market. Knowing that they will need a place to live all their lives, they tend to buy a small house and gradually trade up to a bigger one, paying off their mortgages only late in life.
Most of us need a retirement fund as well as a place to live; there is nothing intrinsically risky about regular borrowing to get that fund off to an early start.
If you recognise the article, it may be because it also appeared in the Financial Times a few weeks back.