How we see investments and how they see it – Generation Gap

Are you familiar with the term, ‘Helicopter Parents’? It is a nickname for those parents who are exceedingly attuned to their child’s needs, whims, problems, etc. They constantly ‘hover above’ like a helicopter and hence the name. However, when do you (whether you are the parent or the child) cut the financial cord?

Here, we attempt to emphasise individuality. Financial discipline need not be doing exactly what they did 20 years ago. Completely discarding the old ways is not the answer either. Working out an optimum mix is. And that depends on your age, income, goals, expenses and risk tolerance.

Times, they have changed.

It is not unsurprising that approximately 18 million people invest/save regularly in a country with 1 billion population. When credit is readily available, saving becomes even more of a chore.  

The credit card gen, as some call the millennials, have more choices to consider and temptations to ward off. Less and less number of people today can manage to stay within their income and often get caught in credit card due to cycles. Some lead a paycheck-to-paycheck life with zero savings, a stark contrast to how our parents lived and planned finances. Keeping in mind factors like consumerism, inflation, it will help to take a leaf or two from their books about retirement planning though.

When risk-frequencies do not match

There is a reason why investment goals and risk profiles are often clubbed with certain age brackets. Young adults (especially those in the 20’s) have a broader investment horizon with 30+ earning years ahead of them. With age, one’s risk tolerance reduces. So, your parents in their 50’s or 60’s are bound to have certain set ideas about savings. It is OK for them to be drawn to safe investment avenues like FD’s and Bonds just as it is fine for you to pick a high return scheme like an ELSS. Introspection is the need of the hour.

“Do not save what is left after spending. But spend what is left after saving.” – Warren Buffet.