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In the movie, “American Beauty,” Kevin Spacey plays the role of a husband whose marriage (to Annette Benning) is unraveling. At one point, he looks around the living room and says, “This is not life. This is just stuff.” I thought about that comment as a read Patrick O’Shaughnessy’s new book, “Millennial Money.” How can a young person new to the work force be convinced that setting some earnings aside is worth whatever pleasure they might otherwise gain from indulging in poor spending habits --- spending money on just stuff? O’Shaughnessy nails it when he makes the point that a young person spending $500 on an IPod back in 2001 now has something obsolete. The same money invested in Apple stock at the time would be worth over $30,000 today.

The Millennial generation consists of those who were born between 1980 and 2000. While there are 80 million of them, nothing in our educational system prepares them for what they need to know to understand and manage money. Their first plunge into the world of financial management is typically the company 401(k) plan offered at their first full-time job. Among this group, only about 28 percent of their 401(k) money is invested in stock-oriented mutual funds. Understandably, they are obsessed with the need to not lose a dime of their hard-earned money.

Millennials who do, in fact, bite the bullet and invest all or a portion of their retirement plan savings in stocks need to appreciate that as goofy as it may sound, a young investor should pray that the stock market crashes periodically. Steady fixed-dollar contributions each pay period will be buying greater numbers of shares in the same mutual funds as the share prices drop during the downdraft. While the market is, in fact, lower than previous highs, the average price of all the purchased shares over time will be reduced by the “good deals” available during each crash. This sets the stage for guaranteed investment success realized years later when someone who has “bought low” will be “selling high” as they nibble at the money to provide an eccentric personal lifestyle.

For anyone understandably anxious about receiving a quarterly statement that shows them they have lost money --- maybe as much as 30 percent after a huge crash --- it’s important to hold the following thought: Since 1970, we have had eight major crashes, but when, with the benefit of hindsight, we can identify the day the market hit bottom, the average return for the following 12 months has been 39 percent. Of that gain, 20 percent has taken place in the first 4 to 6 weeks following that lowest day. In other words, staying the course will be rewarded, and over time, average market returns over rolling ten-year periods will average about 10 percent per year (including automatically reinvested dividends.)

But there’s more! Otherwise queasy “newby” investors should appreciate the fact that over the past 29 years, there have been 19 of years when the stock market has gained over 20 percent in a single calendar year. The normally curious would ask how many years it had LOST more than 20 percent. The answer? Two. Obviously there have been more times when the market has lost more than 20 percent, but when measured in an actual calendar year, there have been only two calendar year losers in almost forty years. For example, in October of 1987, the market lost 25 percent in a single day, but thanks to a huge run-up prior to the crash, the average for the year was a 5 percent gain.

So-called “Stock market performance” is a measure of the collective returns of the 500 largest U.S. companies. A Millennial investor doesn’t have to settle for something that mundane. Diversifying over several different types of investments creates better results over time. Small companies, foreign stocks, and other specialty investments carry more risk individually and each type over time will earn more thanks to the invisible hand of economic forces that delivers a “risk premium.” The risk premium is a higher return as a reward for sleepless nights. However, a combination of these riskier asset types will generate a composite result that will look more like a straight line. For Millennial investors, this approach will avoid boredom, sustain interest, earn greater returns and offer a hands-on lesson as to how different investment types work. Nothing succeeds like success, and the amount of smug satisfaction that can come with a growing account balance can far exceed any similar feeling from an experience in Starbucks or the Apple store.