Financial lessons for the younger generation

Every person on this planet needs financial stability through investments, savings, and insurance. Here we are talking especially about young people.

Young people need more clarity regarding their financial objectives. It is witnessed majority of this section of population barely focus on savings. Whereas savings should be one of their top focus as soon as they acquire their first job. It aids in financial stability and sharpens their focus on their financial objectives. Due to the need for more depth in the educational system’s treatment of personal money, many young people need more appropriate financial literacy. As a result, they need to be more knowledgeable on this topic. Having good understanding of finances in this age of rapid technological progress and employment uncertainty is critical.

1. Bank Fixed Deposit offers safety of investments and low return

Young people invest in short-term fixed deposits believing they would have ready access to money as and when needed. Inspite of being safe, bank savings do not provide sufficient returns to outpace inflation. Thus, bank savings should be considered to an extent of maintaining sufficient liquidity for immediate and emergency requirements.

2. Employer Corporate Group Insurance Plans offers safety till one is in employment

Young people also rely on the group life and medical insurance offered by their employer. If one loses employment, an over-reliance on group insurance might turn an expensive affair. Thus, one must consider having an individual insurance term plans that has low premiums and high coverage. One thing to keep in mind before purchasing a term insurance that is a pure life risk cover and not a money making financial instrument.

Whereas, one should also cover itself sufficient for the medical expenses by taking extra mediclaim insurance policy for any emergency situation. 

3. Mutual Funds – offers favourable risk and reward ratio in the young age

Time is on the side of young people. They should invest in equities based on their investment horizon because they can afford to take risks. A mutual fund is ideal for someone who doesn’t know anything about equities. Equity mutual funds can assist a person in achieving various financial objectives. It also supports in building one’s retirement corpus. In the long run, the equity mutual funds are expected to deliver 10% to 15% per annum returns on an average. If one investing starts early, it not only helps to combat inflation but also offers the chance to create a good corpus with modest contributions.

4. Liquid Funds offers more return as compare to fixed deposit with little high risk

Liquid mutual funds are also an attractive investment option for young people to create an emergency fund. Instead of keeping capital in the bank saving account, investments in liquid mutual funds are better as expected returns from the latter is higher. These financial instruments yield more profits and can also be sold if cash is needed immediately.

5. Risk management in investments – an important clamp to save your capital

Risk management in investments is a process to save your capital from market & financial instruments volatility. Eg. a crash in equity market should not wipe out the entire capital or high inflation should not eat your low returns from gold, debt etc. Therefore, it is very important to spread the risk across several asset classes using a combination of stock, debt, gold funds, and alternative investments ensuring that the capital is protected during varying economic times.


For young generation, it is very important to focus on their investment strategy right from their first job. Even a small investment that is done regularly becomes a huge corpus in few years. The decision is a trade off between the expensive gadgets, dinner, clothes, vacation etc. and buying an investment. This will make all the difference in the later stage of the life.

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