Best Investment Options For Millennials
The zeitgeist is defined by the enterprising millennials unlike the Generation X of an era bygone. These millennials are risk averse go getters with a penchant for earning and spending at their leisure. And the best part is that they are willing to take both the traditional and the alternative routes of investment to get to their destination. The biggest testament to this is the number of startups founded by those just over 20 years of age.
Being risk averse, these millennials also lookout for investment options that deliver high returns. As per a recent survey high net worth millennials are more investment savvy with better diversification. Figures indicate that the investments of rich millennials are more than double of their “poorer” counterparts. It’s seems like they all have read the book “Rich Dad Poor Dad” by Robert Kiyosaki published over 2 decades ago. So unlike the baby boomers and the Gen-X who missed out on their chance to earn young and earn good, millennials have the latitude to multiply their money.
However, it has to be mentioned here that it’s not just the risk averseness of the millennial but the progressive policies and innovative technology driving the economy that’s propelling the investment mindset in the cohorts.
Now let’s look at the some of the investment avenues for millennials (or some avenues in which the rich millennials have already parked their investments)
Best Investment Options Followed By Millennials
Direct Equity Investment
Direct investment in the stock market is simply not a money making strategy for the millennials it has turned into a fad, albeit a good one. Investors with good grasp over the market and sufficient patience can get good returns. Although a volatile market with unforeseen fluctuations, it has the potential to deliver double digit (%) returns. Those trying to hone their skills can choose from day trading, swing trading, momentum trading and scalping. The best option here is to get in touch with a seasoned mentor and learn on the job. There are several institutes that offer short term courses at a nominal fee.
This is where the seasoned investors lurk. Also called F & O Market or Futures and Options market, hedging is a method to safeguard one’s investments or an insurance to cover risks from volatility.
Bonds are loans that an investor lends to a corporation or government. Bonds are not that feasible in India as it is in the US, however, one can always buy a debt mutual fund. Although bonds do not give high returns, it is a safe mode of investment and can also give tax benefits. Savvy millennials with less risk appetite also invest in NSCs (National Saving Certificates) issued by the government.
“Mutual Fund Sahi Hai” was the ubiquitous ads that were galore in the media a couple of years ago and it did have a positive impact. People of all ages started investing in mutual funds, especially through SIPs. Millennials use the SIPs to build a corpus over a period of time for specific purposes. Equity-linked saving scheme (ELSS), a diversified mutual fund that offers high returns and tax benefits under Section 80C of the Income Tax Act, is also a youth favourite.
EPF and PPF and NPS
Earlier people used to opt out of EPF and chose to get more amount credited to their salary, however, people today are smarter and actually choose employers who offer EPFs. PPF is another investment vehicle that has found favour with millennials because of its tax benefits. Millennials nowadays are planning to retire early and choose to invest in the government’s NPS scheme. NPS invests part of the sum invested in equities which helps get better returns (more than PPFs). NPS and PPF also allow partial withdrawal for special (or exigent) occasions.
Investments in the commodity market can be done through a futures contract which allows buying or selling a commodity at a future date at a specific price.
Currently a nascent investment platform, P2P lending is more popular with the millennials than the traditional stock market investors. Investment shrewd millennials are aware of the potential offered by P2P lending platforms which is forecasted to become a billion dollar industry in India in the next 5-7 years. It is an avenue to get monthly returns and make short-term investments.
Investment in real estate has always been the preferred choice for Indians who look forward to the rental income. Millennials are now more into flipping houses than depending on rental income.
Started with Bitcoin and sustained by Ripple, Litecoin, Ethereum, etc. digital currencies have become a source of investment for the tech-savvy millennial. Many crypto-currency exchange platforms are available in India to purchase and store the digital currency.
Last and certainly not the least the millennials with high risk taking wherewithal and cash surplus can become angel investors and fund diverse startups.