Financial Investments and Literacy amongst Youth

5 min readNov 21, 2021

A nation’s productive capacity depends on a healthy capital formation. Robust savings rate coupled with good capital mobilization are the key macro-economic variables, which play a significant role in economic growth. A nation’s savings and investment propensities also play a key role in achieving dynamic stability in the capital market. Per Capita Income in India has been on the rise since the last decade. With growth in the PCI, savings and investment in the country too has shown a northbound movement. At the same time, there has been a phenomenal rise in the youth population making India the youngest nation. This young workforce is expected to drive the engine of growth. In Economics, investment means formation of capital. As such, from a pure economics point of view, the formation of physical assets is important when considering investment.

So, we decided to talk to a sample of 30 young adults from Chennai, Bangalore, Mumbai and Delhi each. We got a sample which consisted of both married and single men and women. These 30 people formed the basis of our study focusing on financial investments and financial literacy amongst the youth; how they go about educating themselves, and how do they look at risk, returns and various modes of investments and what determines the same.

While savings is simply setting aside funds for future, investment also involves mobilizing them so that somebody else may use it for productive purposes.

The objective of the study was

(1) To understand the youngsters’ income and saving pattern.

(2) To know their long-term financial goals.

(3) To find out risk appetite of youngsters.

(4) To find out whether the young investors are looking for long term growth or risk or return or liquidity.

The study showed that spending and saving patterns of youth in India have transposed drastically over the last few decades. This can be a result of westernization and acceptance of a modern civilization that Indians were not much aware of decades ago. It is evident that Indian youth is now fascinated towards spending a considerable sum of their income towards entertainment and shopping.

A perfect example of this can be comprehended by taking total number of shopping malls that have emerged in India in the last few decades. Spending and Investment trend of youth is being studied globally and internationally and results vary as per cultures, geographies, gender, and age.

It was found that there were considerably significant differences in spending patterns of males and females. i.e., there are gender differences in spending behavior. Most of the males spending goes on shopping branded items, mobile phones, electronic gadgets etc. while the females preferred on status enhancing personal care, health clubs and apparel which vindicated the McKinsey study done a few years back showing the affiliation that the millennials have for experiences. Read More

The youth also echoed that they would like to enhance their investment habits in mutual funds, fixed deposits, gold, and real estate to have a financially secured future.

Our study found that safety and security, which were always important reasons for investment, are still influential in determining the direction of investment. Respondents liked to keep multiple options while choosing their investment options. However, returns on investment were obviously the most considered factor followed by risk.

Saving accounts in banks appears to be the most common way of saving and investing for the respondents.

2.Mutual funds have also gained from young investors through the Systematic Investment Plan (SIP). This is a favored investment option for the youngsters. This is especially true of the young salaried class, which has just started earning and does not have much savings as yet.

3.Youngsters today do know about the options available to them due to the rapid spread of information in recent times. They are not always sure about how to go about investing in newer ways actively.

An informed investor is a good investor; guidance and information to youth has to be done in a way that is in accordance with their lifestyle — Podcasts, social media especially online videos, forums and tutorials are the way of learning of the young generation.- Mimi Partha Sarathy, Founder and Managing Director

In Conclusion

Young investors have the single most valuable resource on their side⁠ — time. Compound interest and dividend reinvestment are proven methods of building long-term wealth.

2.Day-trading looks like a desirable lifestyle and can indeed yield above-market return, but most investors who utilize this strategy risk losing their retirement accounts entirely.

3.Real estate can be a solid investment choice if the investor is going to stay there for longer than five years. In the current scenario of fractional living, most youth prefer not to be tied down for that period of time. Simple EPF and PPF accounts are good and safe investment choices, especially in the EPF as there is a minimum percentage that your employer will contribute in addition to your savings.

4.Get a financial advisor. It doesn’t matter how much you are investing… it doesn’t matter how you are investing… If there is no financial plan, no financial goal and asset allocation, you are going to be whistling in the dark.Read More

Financial Investments and Literacy amongst Youth

Written by Mimi Partha Sarathy

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