“Mutual Fund investments are subject to market risks, read all scheme-related documents carefully” – Here we go with Investment Tips For Millennials!
We have almost 440 million millennials in our country who are currently interested not only in enjoying memes to this disclaimer but also in switching ON their investment journey.
Before we start with some interesting Mutual Funds and Investing Tips for Millennials, let’s quickly get over with some boring Stuff!
If we start looking at our country’s market, the average Assets Under Management (AUM) of the Indian Mutual Fund Industry for the month of August 2023 stood at ₹ 46,93,648 crore. It has grown from ₹7.66 trillion as of August 31, 2013, to ₹46.63 trillion as of August 31, 2023, a more than 6-fold increase in a span of 10 years.
As of August 31, 2023, there were a total of 154.2 million mutual fund accounts.
But even with these positive data, India’s market penetration is very little and stands far behind compared to the top 5 AUM market cap countries.
Is it a bad news? For now, yes!
But what the future holds is a wide open market ready to be included and a sky of opportunity.
Now, reading these data points, can you guess which generation is the most interested in this boring, “Papa Wale Talks“ Industry?
No, it’s not the Kishore Kumar fans (although we all are), it’s people from the Kumar Sanu and Arijit Singh Era.
The mutual fund industry is being flooded with the inflow of millennials.
Based on a recent CAMS report, out of the 16 million new investors who entered the mutual fund market between FY19 and FY23, nearly 8.5 million of them belonged to the millennial demographic.
As of the end of March 2021, Paytm Money had over 70 lakh users across the country, and over 80 percent of its users are below 35 years of age, adding to that, on average a Paytm user is 28 years old.
So Millennials, if you are done with your Doge Coin Fad and actually want proper Investment, then grab your Chai Latte, kick back, and dive into the world of mutual funds and investments with some Investing Tips for millennials.
SIP It Up, Baby!
No, we’re not talking about sipping your drink.
SIP stands for Systematic Investment Plan, where you invest a fixed amount regularly. It’s like a subscription to wealth creation and is as easy as subscribing to your favorite YouTube channel.
A survey by CASHe, a financial wellness platform, found that 34% of millennials have started saving for retirement. Among their investment choices, Systematic Investment Plans (SIPs) are the top preference, allowing gradual mutual fund investments.
Millennials are adopting smart savings habits, favoring SIPs as this allows them to participate in the market without breaking the bank and taking much risk.
SIP not only shows you the magic of Compounding but also teaches Investment discipline and gives the benefit of Rupee Cost Averaging, Professional management and Diversification.
So what’s stopping you?
Emergency Funds: Your Financial Vibranium Shield
Before you dive into the investment pool, make sure you have a tube of emergency funds.
It’s like your financial safety net, ensuring you don’t have to sell your Bike when life throws lemons at you.
Having an emergency fund is crucial. It’s a necessary corpus you should set aside to address unexpected financial crises.
But building an emergency fund is a gradual process that can’t be accomplished overnight. To create this financial safety net, it’s advisable to allocate a specific sum each month into a separate bank account or liquid Mutual Funds.
Over time, this fund will grow into a substantial amount that provides the security you desire.
Suppose your goal is a Rs. 2 lakh emergency fund. Allocate Rs.10,000 or Rs.20,000 monthly from your income to steadily build the corpus. Adjust your investment contributions as needed to prioritize the fund’s development.
Just keep in mind that these funds should be Liquid enough and have a decent rate of return as well (Cherry on Top).
Ditch FOMO and YOLO Investing
These terms look good only on Instagram (Where tons of investment tips for millennials are flooded by so-called “Finance Gurus”)
Avoid investing in something just because your best friend’s cousin’s neighbor’s cat made a fortune on it.
Do your research, understand your risk tolerance, and invest for the long term.
According to insights from Felix Salmon at Axios, the YOLO and FOLO mindset played a significant role in driving the bullish trend even during the pandemic:
YOLO, or “You Only Live Once,” often promotes riskier financial behavior. Rather than opting for the proven strategy of leveraging compound interest, some prefer a bold approach to wealth-building. In a world of near-zero interest rates, they lean towards investments with “low-probability/ultra-high-return” potential.
On the other hand, the Fear Of Missing Out, known as FOMO, is a natural byproduct of a bull market. As stock indices continue to soar and your peers boast about their financial gains, it becomes increasingly challenging to exercise caution and restraint.
Remember, YOLO also means “You Only Lose Once” if you don’t plan wisely!
Diversification is essential (Just like SRK does in his roles)
Don’t put all your eggs in one mutual fund basket. Diversify your investments across different asset classes and funds just like SRK does with his movies. Action, romance and comedy should come hand in hand.
A well-diversified investment portfolio goes beyond just having a mix of asset classes like stocks, bonds, and other securities. It involves spreading your investments across a variety of companies, asset types, and industries.
Going even further, diversification can extend to money market accounts, alternative investments, and holding some cash. This approach helps to reduce risk and increase the potential for stable returns in your overall investment strategy.
A similar thing happens in Mutual funds where the main task of fund managers is to diversify your investment according to your needs.
Just remember to do your research and Buy different mutual funds instead of going all in.
Ps- We are SRK fans and loved Jawaan.
Be Patient, Grasshopper!
Rome wasn’t built in a day, and your wealth won’t either. Investing is a long-term game. The longer you stay in, the more compound interest does its magic.
Time plays a crucial role in investing because it unleashes the remarkable phenomenon Albert Einstein once called the “8th wonder of the world” – Compounding.
In the realm of investing, compounding occurs when the returns generated by your investments start to generate returns of their own. It begins small, but as it descends, it accumulates mass and grows substantially.
However, to truly witness the power of compounding, you must give it time. This principle applies to all types of investments, including Mutual Funds. The benefits of time and compounding are well-established, especially in the case of Equity Mutual Funds.
Keep your logical Brain Active
Becoming emotionally gone should be restricted only while thinking about Sonam Bajwa.
While Investing your hard-earned money, you should know exactly what your goal is before planning any sort of Investment. Having clarity about this will help you formulate better investment decisions.
Ignore the emotions of greed and fear. You cannot buy a small-cap mutual fund giving a 40% return if you have long-term goals and are scared of losing money.
Similarly, living with your head under the sand is also not correct gameplay.
Be calculative, analytical and have a clear goal and move forward with your plans.
You Know Nothing, John Snow!
Even though you might be tech-savvy, investing isn’t all about DIY.
Maybe sometimes, pretending to be foolish is better when you get an opportunity to learn.
Always consult with a financial advisor or use digital platforms that offer genuine advisory services. Mutual funds selection in itself is a task to take up and making random decisions can come back at you.
Choosing a movie on Netflix takes hours right? Then why not a few days educating ourselves?
Stay around Invest My Paisa and you will feel the growth coming in you.
Hence maybe becoming John Snow and pretending to know nothing is better.
There are a few other Investing Tips for Millennials
- Starting as early as possible
- Which mutual funds are best as per your age?
- How mutual funds work and other Mutual Fund Investment Tips.
Interested in these as well? Then stay tuned for such Interesting blogs.
Till then, Keep saying this to your subconscious – “PLEASE INVEST MY PAISA WISELY!”
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