Are you a millennial? Don’t lose out on the opportunity to grow your money… Start an SIP today!
If there’s any buzzword that has gained the most attention of people worldwide in the last few years, it has to be the term “millennial.” Also known as Generation Y, it encompasses people born between 1980s and Early 2000s. Although millennial characteristics vary from country to country, they have largely been painted as a generation that is careless with regards to their money saving attitude and as a cohort that is overly dependent on social media, computers, and smartphones. In most parts of the world, their early life was marked by an increase in access to knowledge, marked growth of world economy, explosion of money saving schemes, be it mutual funds, attractive fixed deposit rates, or systematic investment plans (SIPs). However, not everything is so rosy - the recession of 2008, the current uncertainty on the world political stage, and increasing automation has cast dark clouds over how successful this generation can be in experiencing a comfortable life based solely on traditional investment options like Fixed Deposits or scrappy mutual fund investment habits. Besides the macro conditions, the millennials’ own habits of spending big on food, entertainment, fitness, and other luxury things puts a great pressure on their savings and makes it very likely that they will be worse off than their parents, Gen X or “Baby Boomers” in terms of corpus at retirement.
So, what can they do? What kind of investment habits would help millennials enjoy a decent life after retirement, while not curtailing their daily expenditures by much? For one, starting investment early and making sure to make it at regular intervals can go a long way in ensuring their financial freedom and growth. Today, Systematic Investment Plan, or “SIP,” is gaining tremendous popularity among investors from all walks of life. And why shouldn’t it? After all, SIP offers so many benefits, chief among them:
- Convenience - SIP is a convenient method that can help create wealth. Using this tool, you can invest as little as Rs. 500 on a monthly or quarterly basis. It does not disrupt your household budget.
- Flexibility - You also have the flexibility of choosing your investment amount. The only rule - the investment amount should be in multiples of 500, i.e. when investing, you can invest Rs. 500, Rs. 1000, Rs. 1500, Rs. 2000 and so on. This style of investing turns dreamers into disciplined investors.
- The Power of Compounding - The rule for compounding is simple - the sooner you start investing, the more time your money has to grow.
|Investment Amt.||Starting Age||Investment Period||Amt. at the age of 60|
|Person A||1000 pm||30||30||30,80,973|
|Person B||1000 pm||35||25||17,02,207|
- Rupee Cost Averaging - SIP uses Rupee Cost Averaging. Here, the number of units acquired per month varies based on market fluctuations. So, if the market is down you get more units and if the market is up you get less. This minimises the effect of market volatility on your investments.
See? How convenient and smart an SIP investment is! Millennials can be the most successful generation ever in terms of financial security and growth, if they choose to remain disciplined in their investment habits and pick the right investment plan. A Systematic Investment Plan offers so many benefits and makes it simple and easy for young investors to diversify their risk and be more disciplined with their investment habits. Be it for their careers, their higher education plans, their international travel plans, or their retirement plans, an SIP can help a lot in maintaining an orderly and systematic approach to wealth creation and financial security.
Once you have a list of your goals and a date by when you want to achieve them, you have to ask yourself - are you on track to achieve each of them?
Yes! Maybe? No!
If your answer was ‘Yes’. Congratulations!
If your answer was ‘Maybe’ or ‘No’, do not worry, you can get back on track using our SIP calculators here