Synopsis
.Millennials in India are facing a number of financial challenges, including rising cost of living, student loan debt, and stagnant wages. However, millennials also have a number of advantages, including access to technology, a global mindset, and a strong work ethic. Building wealth is not easy, but it is possible. By following these tips, suggested by Mr. Suresh Parthasarathy, the eminent columnist and well experienced Certified Financial Planner, millennials can move from being consumers to investors and achieve their financial independence.
Table of Contents
How to move from millennials to billionaire
Budget and live
Loans
Insurance
Emergency Fund
Investments
How to move from millennials to billionaire? .
Millennials are those born between 1980 to end of 1999.These are the people currently required advice to how to build a wealth.
Budget and live: We live in a world of discounts and Buy now and pay later.This will prompt us to buy things we may required or not.Also the App culture makes us spend thrift.Unless we identify the difference between need and want building wealth is difficult. A need is something that is necessary to live and function, whereas want is something that can improve your quality of life. So,first process to become billionaire is budget and live.
Loans: Right from mobile phones to international vacations people are opting for EMI options.The moment buy now pay latter creeps into one’s life style they tend to outlive their life style and getting into debt trap. So,always try live within your means,it is always good to have great life style,it is also important to have sustained life style. If you believe is more comfortable than the earlier one’s buy any product or life style that matches your current standard of living rather than living for others .So, think and be careful before buying anything on EMI.
Insurance: Insurance is a means of protection from financial loss,so,while you are trying to build wealth first step is to assure of the target is buying insurance. Then the question arises how and what type of insurance to be bought to protect family. Term insurance is the best available insurance policy to protect your family. When you are young if you buy such a policy the premium will be lower. For example you are 35 wish to cover yourself for Rs 1 crore till you turn 85.The premium will be Rs 26,000 and it will be constant till you turn 84. So,to build wealth, first protect and buy term insurance. You know that how Covid have really educated the common public the importance of having health insurance. So,buy health insurance to protect the accumulated wealth.
Emergency Fund: The life style and employment are creating lots of uncertain in life.So,it is better to create a fund to meet eventually such as Covid, hospitalisation or layoff due to economic slowdown or company going bankrupt. Then all of sudden monthly income will stop and meeting the monthly expenses and routine expenses such as children education, serving loans such as home, personal and other loans will become challenge.So, it is always better to buy time till situation back to normal. I suggest you to build 3-6 months of monthly expenses that includes your EMI and investments.So,we will not have surprise due to any eventuality and you can handle the situation with ease.
Investments: It is always good to diversify the investment across all asset class. Although single asset class might give good returns at patches, but the timing places a great role. Example during the Covid due to uncertain situation people jumped and invested in Gold have a fabulous return of 38 per cent in short span of 3-5 months. But once the situation stabilised the equity markets gave stellar performance and those invested during the covid hoping for turnaround made a killing, all situation we will not have guts to invest at the right time. So, segregating the investments across assets such as equity, debt, gold and real estate is the best form of investing to have peaceful investment
experience and earning around 12 per cent portfolio returns will be easy.If you are less than 40 ,I suggest to invest 50 per cent in equity,35 -40 per cent in debt and 10-15 per cent in gold. Since real estate cannot be invested on monthly basis, accumulate in the three-asset class and book profits to buy real estate. Investing is about creating a wealth but the process should be enjoyable. To experience such an outcome, follow asset allocation.
