All about Savings, Spending and Investing for Millennial

Unless you've been living under a rock, you must know about the GameStop saga. Who do you think were the drivers of the entire story? The Wall Street giants? No. It all started with a group of individuals on a social media platform called Reddit!

In today's article, we will talk about Millennial Investing & Savings and introduce you to an up-and-coming investment option.

So, let's get started.

Who are the millennials?

The Pew Research Center described the millennial as the generation of individuals born between 1981 and 1996. As of 2021, that would mean someone between 25 and 40 years of age. The millennial generation, also known as Generation Y (or Gen Y), follows Gen-X in terms of numbers and has edged out the Baby-Boomer generation as the most significant one. A report issued by the investment bank Morgan Stanley suggests that the millennial segment is redefining India's financial success. Millennials make up 46% of India's workforce, and they contribute 70% of the national household income, which makes them an essential factor in spurring national growth.

The Indian Millennials

We've already touched upon how the millennials are contributing to India's financial growth. Many analysts, however, speak of a downside to all this – millennials spend beyond the means available to them, which often leaves them broke by the month-end. As Vineeta Jain of Pay It Forward (an initiative that seeks to educate young individuals about personal finance and money management) says, "Saving is the last thing on their minds."

So, the question arises – is the concept of financial planning alien to the average Indian millennial? BankBazaar issued a report that surveyed 1515 respondents (both men and women) between the ages of 25 and 35 in twelve Indian cities and found – millennials are empowering themselves by making independent financial choices.

The report issued by BankBazaar debunks the general theory that the millennials are clueless about financial planning and management and have unclear financial goals. The report found that "wealth creation" was one of the topmost goals among the millennials, with 69% citing "buying a home" as their biggest aspiration. The 'home-buying' goal was followed by health, fame, relationships, personal growth, and image. 

Trends in Millennial Investing:

With the onset of the COVID-19 pandemic that shook the entire world, many millennials made their stock market debut from the comfort of their homes. We're not saying they weren't investing before. But the nationwide lockdown was a contributory factor in the surge. Following are some of the trends observed in how the millennials invest:

• Millennials have started taking initiatives, but money remains with the Gen-X: Sure, millennials are large in number, but the Gen-X constitutes the volume of investments. The assumption here is that millennials have more spending power with a lower appetite for risk (given the low savings and increased expenses). Millennials are cautious about investing in a single basket and often venture out exploring other available options.
   
• Social media-driven investment decisions: Like any prudent investor, millennials also research before investing. However, the reliance on social media research over traditional sources like newspapers and journals has increased. Influencers and financial experts dole out their reviews on social media platforms, and millennials base their decision on them. One of the pertinent examples of this is what happened with GameStop. (To read more, head over to our article about the GameStop story).
   
• Increased social awareness among the investors: Millennials are incredibly well-informed and aware (or "woke" as is referred to in the lingo) about their investing choices. Gone are the days when returns were the critical consideration of the investment decision. Millennials look into the nature of the company they're investing in – most preferred being clean technology companies, smart energy tech, companies involved in social causes like poverty eradication and rehabilitation, removal of gender biases, pro LGBTQ+ companies, etc.
   
• A Do-It-Yourself (DIY) culture of investing: Millennials have become acclimatized to using technology for every aspect of investing through various online tools and apps. Millennials use these tools and apps to stay up to date with the trends, their portfolio position, etc. However, although continuous monitoring is a good thing, it is noted that it makes the millennials a nervous and impatient investor that is not good for the stock markets in the long run.

Capitalizing on these trends, a company Niyo, has come up with an innovative new product for the millennials - 'NiyoX Savings Account.' It is a two-in-one account providing savings and wealth account benefits. The account opening procedure is entirely online, paperless, and hassle-free. The PAN and Aadhaar number and the details provided in the initial registration eliminate the need to submit separate KYC for mutual fund investments. The company charges zero commission for mutual fund investments. Customers registering an account are instantly afforded a virtual (Visa Classic) debit card. The account opening and subsequent transactions entail many attractive offers and cashbacks. The state-of-the-art mobile app is easy to use, secure and can set a PIN to restrict unauthorized access.

Niyo is soon launching the "Invest The Change" with Niyo Money, where you can save small amounts of money into mutual fund schemes and earn healthy returns. The feature is easy to use, allows you to choose the funds you wish to invest in and regularly tracks your spendings. Niyo also plans to soon introduce the feature to invest in stocks with a no brokerage system. Niyo is an excellent platform for the tech-savvy millennials that does away with the need for multiple accounts. So, what are you waiting for? Go check it out!

How can millennials save money?

There are several methods in which one can save money for a better and secure future. Millennials, in particular, can exploit some of these easy ways of money-saving:

• Spend responsibly: It is always wise to 'live within your means.' You can have a monthly paycheck of Rs. 20,000 or Rs. 5,00,000 – but you have to learn to live within that. Always remember that credit cards are for contingencies and emergencies and, although they come with attractive schemes and offers, they are essentially loans you have to repay in the end. So spend wisely and avoid unnecessary debts.
• Mutual Funds – never a bad investment: One must always set aside 15-20% from his/her salary to saving and investing. Millennials have age as their friend – investing in equity funds will be productive for them over the years. Did you know a monthly SIP of Rs. 2,000 in a mutual fund with a CAGR of 12% yields about Rs. 70 lakhs in 30 years? You're not just investing; you're saving money and creating wealth out of your savings.
• Tax savings benefits: The Income Tax Act provides deduction under section 80C for investments in equity-linked savings scheme (ELSS) up to Rs. 1,50,000. So, you see? Investing in mutual funds (ELSS) not only creates wealth but also gives tax savings benefits.

Closing remarks

If the GameStop saga has made anything clear, the millennial generation can do wonders in an economy's financial health. A little guidance in the right direction and they can drive the markets to new soaring highs.

So, how do they do it? Start by learning to save – be it for emergencies or investments. It doesn't matter how much you save, just be comfortable with the amount and stick to it. Be patient and disciplined in your investments, and you will emerge a winner at the end of the day.

Stay Positive, Test Negative!

Happy Investing!