In alignment with the fast-paced world that we live in, it is imperative for everybody to adapt quickly. One striking evolution that the modern world has witnessed is that more and more young individuals are beginning to rule the world of tech, science, business, and politics.
Yes, the ‘minimum’ age myth has been busted and the average Indian now does things that only a typical middle-aged Indian would do a few generations back. However, this has had a negative impact on the affinity of Indians to save. Historically, Indians have been known to be thrifty, but today, the trend is changing and lesser Indians save over the previous norm of 30% of their income.
The idea of living from paycheck to paycheck is catching up and this is a dangerous sign. An individual needs a proper contingency fund and a retirement corpus to have any chances of having a peaceful retired life.
While the very process of saving and investing has become increasingly easy and tech-driven, the mindset to do so has not caught up yet. In particular, equity investments in India account for almost a negligible proportion of the Indian household investments/savings. The root cause of this problem is financial illiteracy, ignorance, confusion or stigma associated with investing. That said, it is the responsibility of each young individual to guarantee their financial future by making careful investment decisions today.
To harness the growth of the Indian economy, it is important to invest in stocks and mutual funds. More so because the interest rates on fixed deposits are plunging, and inflation is on the rise. While a student who has just received a job offer may not have to worry about retirement, starting early is important as one can make the most of compounding their investment over a long period of time.
An equity investment also comes to the rescue of the young investor during the purchase of a house, vehicle or higher education.
How? Well, it will save him/her from taking on debt and toiling hard to repay it for several years. This unique benefit of investment replacing debt has two more advantages: a) the investment increases in value over time and b)interest costs can be avoided.
Financial independence is also very important to the teenagers of today. They are interested in entrepreneurship because they want to accomplish something personally and sustain themselves financially. It is not an uncommon sight these days to find students paying for their daily expenses all by themselves. Irrespective of age, responsible investment nurtures discipline & freedom for an individual.
While there are many reasons to invest, it is also important to understand the process and methodology of investing.
A mutual fund is a good way to start for a first-time investor who does not understand the vagaries, nuances, and risks involved with an equity investment.
A basic SIP (Systematic Investment Plan) can be started with as little as INR 100. The best way to save is to put away the money before expenses start kicking in. If one feels it is unsafe to commit to a SIP, there are select mutual funds that accept lump-sum deposits as small as INR 500. This removes the concern of not having enough to invest.
At an early stage of life, an individual can afford to spend time conducting their own research to find out the best investments. And in case, he or she has doubts regarding the same, they can always seek expert consultation. After all, a small fee is nothing compared to suffering huge losses due to inexperience.
To quote Abraham Lincoln, the best way to predict the future is to create it. By investing in the present, youngsters can secure financial stability and freedom in the future.
