A Call for Financial Planning

With the growing economy, India’s investment scenario has also changed. While back in the 2000s, when the BFSI sector started blooming, only the bulls of the market invested, today someone as young as an 18-year-old is also an active investor.

The mindset of today’s youth has evolved in terms of choosing their investment options. For instance, around 20 years ago, we did not even know any other options of investment apart from those offered by the banks. But today, though not completely, the youth is at least opting for a combination of traditional and modern investment options.

Studies have shown that the Assets Under Management (AUM) of the Indian Mutual Fund Industry grew from 7.28 trillion rupees as of July 31, 2011, to 35.32 trillion rupees as of July 31, 2021 — four-and-a-half fold growth in just 10 years. India has also recently, in May, crossed the milestone of 10 crore folios. The total number of folios stood at a whopping 10.55 crore as of July 31, 2021.

However, to bring in a transformation in India’s investment scenario, the investor’s psychology has to be changed. People still prefer the traditional options of FDs or insurances as their primary investment options. But they need to understand that FDs can be used for emergencies and insurances are life insurance covers. But what about their luxurious dreams and huge financial goals?

They need to realize that they should invest in something that gives them a return interest rate that is higher than the inflation rate. Each investor should apply the thumb rule of 100 minus their age. This means that an 18-year-old investor should invest 82 per cent (100-18) of his money in equity. Gradually as they grow, their different life stages impact the investment cycle, and so they must keep reviewing and restructuring their investment journeys.

Determining short, medium, and long-term goals is the first step to begin your investment journey as it allows you to understand how much money you will need at which stage of your life. If one begins to invest right from their working age, they will have a good amount at their disposal to survive in case of any uncertainty, for instance, the current pandemic. Investing at an early age also helps you sail smoothly in your 30s when you have multiple responsibilities — towards yourself and your family as well.

Furthermore, the brands should talk to the youth in their language. Youth is impatient. The brands need to use their daily habits to explain how they can manage their daily activities and savings together. For instance, the brands can term SIP as the new EMI, considering that most of the

youngsters depend on EMIs for most of their needs. We can educate the youth by stating that SIP is nothing but a form of an EMI. They pay house rent, phone or car installments, expensive electronics’ EMI, similarly, SIP is nothing but an EMI that they will pay to ensure a better future for themselves.

A person needs to think about his openness, vigilance and understand one’s financial goals to have a better future. Financial planning is the need of the hour. Youth needs to learn that investment is the new saving and SIP is nothing but EMI.

The author is the founder-CEO, hotstuff media labs

DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.