Youngsters must get into the habit of investing

There’s always that tinge of excitement in investment when it’s your first ever. I remember words of Grant Cardone that “ Save to invest don’t save to save. The only reason to save is to invest”. Unlike the developed world we are still fortunate to be living in a country where leaving the money in an innocent looking savings account fetches 3% to 7% which by itself counts as investment for many.

Flood of information hits the GenX when they are ready with some savings from childhood gifts and pocket money or from their first salary when one fine day they realise that their booty can generate more than the sleepy looking savings accounts interest. Options are galore from a fixed deposit to a debt fund, from a recurring deposit to a balanced fund, from crypto currencies to equity market or from buying precious metals to real estate.

Risk appetite and liquidity should ideally drive this decision but it usually gets driven by hear and say advice   resulting in a regret most of the times. Assessing the goals for investment is the first step, saving
for retirement is radically different from saving for one’s marriage or for higher studies. It’s unrealistic to expect or recommend a 24-year-old getting first salary to buy an annuity plan which multiplies on attaining 60 years.

It’s best for a first timer is to keep a one to five years horizon. Although it would be hard to resist temptation of liquidating the savings plan for a new and fancy mobile phone or holiday trip with friends. This is why I feel first investment apart from being most exciting is also the toughest one to make. My view is that it’s important for youngsters to inculcate the habit of investing than investing . The best way is to get into something that’s relatively safe as losing out on the maiden investment would be depressing. A combo of fixed deposit and a debt fund would keep things liquid and safe. It’s fun watching your money accumulate and giving steady but low return of 5% to 8%. For the ones who having a touch of silver spoon can go for riskier bets of an equity fund or even have a fling with stocks under guidance of an expert. Although they would find it hard to argue with the elders at home who would constantly advice playing safe and parking in a meeky fixed deposit.  At this point it would be worth pointing out that gold
which traditionally was considered as appropriate for housewives or older lot is back in favour. A consistent return of over 25% over the last few years should easily lure GenX too. Here I would like to give a strong caveat to youngsters who easily get swayed towards high risk or dicey investments like Cryptocurrencies or Ponzi schemes.

So come on boyz and gals get onto investing bandwagon right away

(The writer is an economist and finance expert. Views expressed are personal)