Investment advice for millennials

Millennials, a word which we often come across has given an identity to millions of individuals. While millennials are generally perceived to be tech-savvy, people belonging to the older generation or Generation X could often perceive them to be less hard-working, which has broadened the gap between both generations. While it might be unfair to generalise the thoughts, a number of millennials believe in living in the moment, enjoying life to the fullest. And though this might sound like the way to live life, there could be instances where being too carefree can come back and haunt one.It is true that circumstances have changed over the last few decades, with the economy taking a turn for the better. However, the population explosion has also resulted in an acute crisis, with it becoming harder to find a job. This, in turn, has put a strain on finances and no matter what one might believe in, the truth is that money is not just a luxury but a necessity to survive in this current environment.Given the importance of money to survive and grow in this world, here are a few simple investment tips millennials can follow to get the most out of their finances.

1. Understand the market – It is important to understand the market in order to make the best use of it. Do not invest money in instruments you don’t understand. For example, the latest bitcoin trend might make you want to invest your money in it, but before doing this make sure you know everything about it. With numerous market instruments to choose from, an informed decision could be the difference between owning a Ferrari and seeing your money go down the drain. A smart option would be to diversify your investments, choosing to split the money between mutual funds, company stocks, gold, etc.
2. Know where your money goes – So you know how much money comes into your account each month, but do you know how much money you spend? Keep a track of all expenses, especially your credit card EMIs, for the interest can take a huge bite out of your income. Doing this can be simple, for there are numerous budgeting apps which can give an account for each rupee.
3. Set aside an emergency fund – Always keep some amount for a rainy day. Given the unpredictability surrounding life, it pays to plan for the future. One could invest in safe instruments like fixed deposits which can be used during an emergency.
4. Invest in yourself – The concept of YOLO has caught on among millennials, who feel that we should live life to the fullest each day. As such, invest a small portion of your money to satiate your urges. Open a recurring deposit and invest small amounts in it each month. This could be used to take a vacation/buy a new bike/splurge on yourself. Alternately, also consider buying a health insurance policy to safeguard yourself against any health emergency.
5. Don’t hesitate to ask questions – If you have any doubt or feel that you need help to make a decision do not hesitate to ask questions. Asking relevant questions can increase your understanding of a particular product, which in turn is bound to make you a smarter investor. Asking questions becomes even more relevant when it comes to investing large amounts.
6. Do not make drastic lifestyle changes – Making drastic lifestyle changes can impact your finances extensively. Imagine you spend Rs.25,000 a month, wherein you ate out a couple of times each week. Now, eating outside every day can see your expenses soar, which in turn could leave you with nothing to save or invest. Changes in lifestyle should be slow and periodic, keeping pace with the income.
7. Do not gamble your money – Do not invest in extremely risky investment options. You might be tempted to buy stocks of a relatively unknown entity, hoping to make quick bucks. While there is a possibility for the investment to click, it is also possible for the company to fail. Always assess the risk factor involved before investing.
8. Start small – Do not invest huge amounts in the start. It pays to take things slow, increasing the investment with time.
9. Use tax saving instruments – Taxes are something which everyone cribs about. Imagine paying income tax on your hard earned money. It does sting a bit but it is the duty of every financially capable citizen to pay tax. While tax evasion isn’t recommended, do consider the option of tax saving instruments. For example, if you invested in a life insurance policy you can claim tax benefits on the premium paid, up to a certain limit specified by the government. Use this amount saved to do things you like.
10. Don’t go credit crazy – Getting a credit card these days has become extremely easy. It is perhaps this ease which has resulted in people using their cards for everything. While there is no harm in using your credit card, make sure that you do not go overboard, for the amount needs to be repaid, with interest at times.

Making money is hard, but saving it shouldn’t be. While millennials might not always conform to norms, they do have the ability to make the most out of life, and these simple lessons can help elevate the quality of their lives.This is a partnered post.