The term ‘millennial’ is used to refer to the generation born after the 1990s. In a way, they are the kids of liberalization. They have literally grown in a tech-savvy environment and have little or no connection with India’s socialist past. Most of the millennials today are educated and established in their careers.
In a recent article, Bloomberg had remonstrated that the millennials were sitting on the sidelines of the biggest bull-market due to their relatively less need to take on risk. The case is largely true for India too! But what is it that the stock markets have to offer to millennials?
Technology at their fingertips
The big advantage that millennials have today is that the stock markets are literally available on their fingertips. User-friendly interfaces and a mobile-friendly trading system have made it possible for millennials to interface with the stock markets more easily. The convergence of technology has made it possible to complete their entire financial tasks on the mobile itself. For example, an individual can create a financial plan, allocate to equities, screen stocks, execute the transaction, interface with the bank, and get a demat credit... all from the mobile app itself. That is almost tailor- made to their tech-savvy nature.
Here is to a cost-conscious millennial
Millennials are considered to be cost-conscious when it comes to paying for services. Not that they don’t spend but they are a lot more conscious about the value proposition before spending. So, the low-cost discount broking model is suited to their needs like a T. There are two reasons for the same: firstly, the discount-broking model segregates the execution from the advice. The millennial customer has a lot more leeway to decide whether they want to pay the cost to the broker or do their own independent research or rely on outside experts. Secondly, the millennial is happy if the cost can be beaten down by a few basic points as the value and impact is directly visible in their profits.
They have time, money, and stability in their favour
For the baby-boomers growing up through the 70s and 80s, those were troubled and volatile times. With unsafe markets, low income-levels and political and economic volatility, the baby boomer generation never got the perfect opportunity to take a long-term view on the markets. The millennial generation is starting their career in much friendlier times. The global economies are a lot more harmonized and responsible, Indian economy is growing, and income levels are relatively higher. They are perfectly poised to plan, save, and invest over the long term. Equities offer them the best form of long term wealth creation in these times.
A systematic approach to wealth creation
The best thing that stock markets offer today is the benefit of gradual and relatively assured wealth creation. Today, it is possible to adopt a staggered and structured approach to wealth creation through regular investing. This is something that the millennials can leverage on. It can be through direct equities or through indirect equity funds. Systematic plans can be structured to take care of most of their goals. The big advantage of the current generation is the relatively stable macro and regulatory environment. So, they as well make the best of it!