How will millennials save and invest their money?

Sep 10, 2018 | 2 months ago | Read Time: 4 minutes | By iKnowledge Team

The fact that millennials exhibit a healthy interest in saving shows how they can easily channel this habit to full-fledged asset creation through effective investment.

saving and investing money

Credit: Joint Base Elmendorf-Richardson

Recent studies indicate that the Indian millennials are doing a decent enough job saving up for the future, but they also seem to reflect a general disdain for investing these savings in the stock market.

Experts seem to believe this wariness could hurt them in the long run, and justifiably so, but working millennials across the country seem unfazed by this, at least at this point. Those born in the 1980s and 1990s are saving liquid cash for retirement, but when it comes to converting it into assets, an alarming number of them are restricting themselves to a basic workplace plan.

Intimidating but secure in the long run

 Investing in the stock market is a powerful tool to increase wealth that is necessary for your long-term goals. And the fact that millennials have a healthy habit in saving shows how they can easily channel this habit to a full-fledged asset creation through effective investment.

The general age in which the sensibility to save picks up among millennial workers is 24, which is younger than Generation X’s media age of 30. This reflects a growing concern to secure a safe future, but also a pervasive ignorance about how to effectively do that. But the good news for now is, Indian millennials are saving more than 10% of their salary which is expected to grow with economic development, and which lies well within the standard 10-20% of gross income often recommended by financial experts.

When it comes to retirement, however, it turns out that Indian millennials are visibly evasive of long term investment plans. Something has them spooked and who can blame them? This is, after all, the generation that has gotten back on its feet after 2008’s massive economic crisis. While most of them are ill-versed with the nuances of how to go about investment, most are scared of bad returns especially in the light of the volatile stock markets even today.

A few key trends show that this demographic is usually more conservative in their investment approach, the previous generation of workers. Yet, this is also the generation with the greatest resources and accessible knowledge at their disposal. Meir Statman, professor of finance at Santa Clara University and author of Finance for Normal People writes for Forbes, saying, “On the one hand, you have really great awareness on the part of millennials of the need to save for retirement,” But many “are still scarred by the financial crisis.”

Millennials held 25% of their investments in cash, according to a Charles Schwab & Co. study, which also shows that 20% of them invest their retirement money mostly in bonds, money market funds, cash or other stable investments. While taking risks with your hard-earned savings may not sound like sound financial advice, financial experts will tell you how it does not always need to be this way.

While they are aware of the benefits of saving, they seem quite hesitant in taking their saving habits to the next step. This is where a savings plan comes into the picture.

But first, what is a savings plans?

Investing in a sustainable savings plan enables you to actively participate in wealth-building processes or stock up that dream contingency fund necessary during retirement, emergency and to repay all loans and debts effectively. And then there is the question of insurance, which becomes a growing concern when you’re on the wrong side of the thirties. Plans like Aegon’s iMaximise offers to secure not only your child’s future but offers timely and market-linked returns. Designed keeping in mind the flexibility required by a first time investor and a market expert alike, insurance plans go a long way in protecting you and your family’s future against unforeseen adversities.

Besides, there are plenty of saving plan calculators today like Aegon Life’s iGuarantee that puts investment at your fingertips.

You need stocks. Period.

Shying away from stocks will only hurt your financial plans in the long term. Avoiding stocks from a young age is not a good idea if you want to increase your wealth, when embracing it can provide you with a one way ticket to secure retirement. Once you realise the perks, you will be better positioned to wield this immensely powerful tool for your own benefit.

There is a lot about investing in stocks that can be daunting but historically speaking, the market has always spent more time being up than down. Its volatility is not a marker for your loss, especially when you are younger. At this age, odds are in your favour to ride out the market’s ups and downs, but only if you are not looking to make a quick buck and divest your stocks as soon as the value drops. Indian millennials stand to emerge as winner, if they hold on to their stocks for a while.

With all of that in mind, it is high time for the country’s young educated workforce to realise that without stocks, they are less likely to keep in pace with inflation. Millennials will be thankful eventually if they follow their savings plan with an effective saving investment plan.

Advt. no.: II/Jul 2018/4284


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