Financial Planning For GenZ and Millennials

As you step into a new year, it is imperative that you plan your finances in order to achieve the lifestyle that you fancy. Financial planning includes a great deal of research to choose an option that best suits your requirements.

Unlike the older generations, GenZ and millennials are much more aware and concerned about financial planning and how essential it is to have a watertight plan. Thanks to abundant online resources, you can now learn about various savings and investment tools to choose the right plan for you. 

As a GenZ or a millennial, it is wiser to instil the practice of planning your finances quite early so as to be prepared for any financial emergencies in the future. 

Here are some savings/investment tools for you to look into:

Fixed Deposits

Fixed Deposits, also known as FDs, are savings options that allow you to earn assured returns at higher interest rates. FDs also let you choose a tenor that caters to your financial needs. Based on how often you would want to receive your interest payouts, you can opt for a Cumulative or Non-Cumulative FD. Additionally, you can access features such as premature withdrawal, tax deductions, loan against FD and much more through an FD. 

Public Provident Fund

Public Provident Fund (PPF) is an investment option backed by the government that, over a period of time, will help you save up and build a corpus for your retirement. Since the government is directly involved, it is a safe investment option that will guarantee you assured returns. The government sets the interest rate of the PPF on a quarterly basis. At present, the interest rate of PPF stands at 7.1%. 

National Pension Scheme

The National Pension Scheme (NPS) encourages you to inculcate the practice of saving up for retirement while you’re young and working. This is an attempt by the government to educate citizens on the importance of saving early on in life to have a stress-free life post retirement. NPS is an advantageous savings tool due to its high returns and tax benefits.

Insurance

Insurance is an important financial tool to invest in, as it safeguards you against any mishaps or damages. In the current scenario, you can insure almost anything. But it is imperative to insure components that are most susceptible to accidents and damages. You can get life insurance, health insurance, motor insurance, and much more on most online platforms and defend yourself, your loved ones and your belongings against any perils. 

Equity Shares 

Equity shares are a great way to enter the stock market, which is often shown to offer higher returns. By investing in equity shares, you can acquire partial ownership of the company whose shares you buy. At the same time, you can benefit from the company’s profits, claim assets and also have the right to vote in the company’s decisions. 

Stocks 

Through the purchase of stocks, you can invest in an organisation with the intent of earning higher returns. Stocks are usually bought and sold on stock exchanges such as the National Stock Exchange and the Bombay Stock Exchange. Since they are market-linked, the returns are higher and therefore fasten the wealth creation. 

Mutual Funds

Assets derived from shareholders are pooled together and invested in securities such as bonds, stocks and other market instruments and assets. These allocated funds result in capital gains that will act as a source of income for you. As per the changes in the performance of the invested assets in the market, you will be a proportionate participant in the fund’s progress. 

Sovereign Gold Bonds (SGBs)

Yet another great investment option is the Sovereign Gold Bond. SGBs are issued by the RBI on behalf of the Indian government. They are securities backed by the government that are expressed in units of gold. SGBs act as substitutes for the possession of gold in its physical form. The issue value of the bond will have to be paid in cash, which will be redeemable at maturity. One of the perks of the SGB is that the initial amount you pay for the quantity of the deposited gold will remain intact since you will be offered the current market price of the gold at redemption. It also helps you avoid risks and unnecessary expenses associated with the storage of gold. 

Planning your finances as a GenZ or a millennial will help you better understand what investment options work best for you and how you can allocate your funds in various investments to build a secure financial future. Having read about the various investment/savings tools at your disposal, you should be able to diversify your investment portfolio and thus climb the ladder of efficient wealth management.