I see twenty-somethings sharing their lives on social media without realising the risks. They make career choices, which are risqué, but are convinced and confident about the choices they have made because they think that is the way they want their lives to be. They want to enjoy life and are pretty clear what they want to do; or make it seem so. When asked about dropping out or getting some experience before starting a venture, they rattle off about how Bill Gates started Microsoft at 19, the same age when Mark Zuckerberg started Facebook.
They all aspire to become rich and may be even famous. While I completely understand it, what I don’t understand is why many of them do not realise that 90 per cent of startups fail and of the remaining 10 per cent, less than 3 per cent actually manage to survive long enough to be a success story. When I discuss investing with those in their 20s, they frown at me. The reason, many have seen their elder siblings or parents lose money in the stock markets. They feel investing in stock markets is risky and that people lose money.
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I want to highlight that in both cases—investing and starting a venture—there seems to be expectations which are unrealistic and are often romanticised. And, those who have experience of having failed in either or both the activities fear and distrust them both completely. They prefer to definitely stay away from investing and the reason for it is—‘The Hot Stove Syndrome’. Referencing Mark Twain’s saying: “The cat, having sat upon a hot stove lid, will not sit upon a hot stove lid again. But he won’t sit upon a cold stove lid, either.” This generation prefers to avoid the stock markets entirely—hot or cold.
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Let’s face it, the economy has not been kind to young people— there is high unemployment, rising cost of living and lower interest rates, making life difficult for them to have the confidence to invest money. Of course, it is one thing to be cautious and another to be ignorant. I have come across an equal share of both among today’s youth. Some are so out of reality when it comes to investing that I am unimpressed by their basic lack of financial understanding.
Even among the higher educated young adults, the level of confusion when it comes to saving and investing is perplexing. At one end, they demonstrate such high degree of understanding and ease of adapting to changes around them in all walks of life, but when it comes to managing money, they get into a shell. The consequence of inaction is severe, because people now have to take so much more responsibility for their financial lives. The ignorance only compounds, as the less they understand, the more daunting investing seems.
I should not be painting the picture with a broad brush as there are also many in this generation who have understood the importance of investing and are part of the SIP generation which invests regularly, each passing month, into mutual funds and are exploring the many DIY wealth creation tools that are easily available these days. Perhaps one needs to go back to taking baby steps and learn from falling than fear from failures.
