Investment by Millenials – How do they Approach Investing?

In this article, we will know about Investment by Millenials & their various approaches towards share market investment.

With India’s median age settling in at around 29, the country is well on its way to becoming one of the youngest countries in the world.

Do Indian Millenials Posses Money for Investment

What’s more, over 46% of the working population in India is now constituted by millennials.

This means that these millennials have started making money, and some of them are well into their thirties after having spent a significant chunk of their lives making money.

However, this very segment of the population in India – and also, around the world, is also known for being thrift-spenders, who have a rather different view on money and savings than their preceding generations.

So, how will this generation end up sculpting their financial lives, and will millennial India be as wealthy as its preceding generations, or will it fall short?

The answer to that question lies in the attitudes of millennials towards money in general. Because this generation exhibits some fundamental differences when compared to their parents.

But apart from their attitude towards money, millennials also exhibit some key differences in their savings and investment practices.

How will these two factors play out, and what does the future hold for this generation?

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Millennials’ relationship with their Money

Before digging into the Investment decision of Millenials, we should know what they do with their money.

In terms of attitudes, Millenials are more ambitious, want to live bigger, and are strongly inspired by the lifestyle of the wealthy and the media figures of the west.

This means that they move fast from one aspiration to the next, and consider living big a greater priority than saving money.

It is ultimately this attitude that drives the thrift-spending behavior for most.

In addition, millennials also exhibit some of the characteristics that are seen across customers across the world – and these are attributed to rapid digitization and its consequences.

For instance, an average millennial doesn’t want to wait and save to upgrade their smartphone or wait for days before they can get their shopping cart delivered to their home.

This desire for instant gratification and cross-cultural trends have also eased millennials’ attitudes towards debt.

As a result, Millenials don’t engage in deep contemplation when taking out a quick loan to buy a good computer or maxing their credit card limits while shopping at the end of the month.

In fact, these behaviors have also been traced to the rising pace of economic growth. But ultimately, these behaviors will not manifest in a wealthy millennial generation down the line. So, what will?

Millennials and Investment

As mentioned above, millennials tend to max out their credit cards, are quick to draw out loans, and want to live big.

But when it comes to investing, most Millenials do not have a well-strategized personal finance plan in place.

Experts have traced this to a lack of financial awareness, and sometimes, a lack of means for those living in expensive cities.

However, the key to wealth, in the long run, is saving and investing alone.

Wealth cannot be generated quickly and instantly, and savings cannot be put off until a later stage in life.

In fact, it is saving at the early stages in life that tends to make the greatest difference when those savings work through investments in the long run.

Some articles rightly note the difference between living big and living with unmanaged finances.

While Americans are known for maxing their credit cards and their desire to live big, the penetration of financial literacy, well-defined retirement savings channels like 401k accounts, and a responsible approach to investing are in stark difference to Indian millennials, where financial literacy rates are much lower.

Beyond all these factors, there is one major trend that underpins millennials’ attitude towards money.

Trying our Investment Instruments

And that is their openness to trying out investment instruments that have remained largely unpopular amidst the preceding generations.

Millennials have shown a greater readiness towards investing in the stock markets through systematic investment plans for mutual funds, participating enthusiastically in IPOs, and venturing beyond dated investment instruments like FDs, RDs, and savings accounts.

The only factor that is holding millennials’ wealth from manifesting, is the lack of financial literacy on a wider scale.

This, however, is changing fast – financial players are now moving to channels where Millenials spend their time the most.

That is YouTube, Instagram, and other social media channels.

Moreover, the availability of free financial education by major players in the market, like Smart Money, is changing the attitudes of the millennials towards investing and fast.

But in which direction will the axis tilt?

Will Millenials thrift-spend their way into their forties, will they start investing for long-term goals?

Most have already started investing through new-age investment vehicles, and many more are in line.

Given that this section of the population is still relatively young and is willing to explore high-growth investment instruments and expose their money to stock markets, the Millenials of the future might just end up wealthier than their preceding generations.

Investment by Millenials – Conclusion

The key to that future will be taking a regular, bite-sized, and systematic approach to investments, as the markets have repeatedly demonstrated the results of overt risk-taking behavior, and the impact of the lack of consistency on the result of any long term investment plan.

But if done right, investing can offset all those thrift-spending sprees, credit card balances, and ultimately manifest as a long-term wealth of a generation that is now coming of age, and already constitutes a greater part of modern India.

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