Fixed deposits in banks, post office savings, government-sanctioned and historically safe Public Provident Funds (PPF) and conventional real estate have been the safest and most convenient forms of savings and investments in India for several decades now.
Millennials, however, are lured towards the path leading to the latest investment trends, leaving behind the old ones. So, with the advent of new investment opportunities such as cryptocurrency, how are professionally-active millennials investing? What’s their preference in terms of investment and where are they putting aside some money for the proverbial rainy day? And finally, what is their approach when it comes to the adoption of new modes of investments like cryptocurrencies?
Talking to a bunch of millennials from various professional backgrounds like IT, marketing, media, management and sales, a whole new picture came to the fore.
When it comes to the adoption of cryptocurrency, which is unregulated and largely experimental even now, millennials prefer to play it safe.
They consider it as ‘quick money’ and a way of earning what ‘banks offer after one or two years of investment’ in one go. Some of them even acknowledged that they aren’t sure how the process works. They only engage in it because it gives them high returns in the shortest span of time. Cryptocurrencies don’t figure as part of their long-term plan.
For them, cryptocurrencies are a mere tick in the box. When asked how they see cryptocurrency in terms of investment, they disapproved sharply. Surprisingly, even the ones who deal in cryptocurrencies said that they don’t see it as a form of investment, because they can’t entirely trust it. The ones, who did invest in crypto, opined that they did at a time, when they had some excess savings in hand which they considered that they could ‘afford to lose’.
With the rise in knowledge and awareness about cryptocurrency in the country, last year, there has been a definite boom in India’s cryptocurrency space. The Internet and Mobile Association of India (IAMAI) that aims to augment the online and mobile value added services in the country stated that there are around 5-6mn crypto users in the country and the number is growing even more. In a press release of IAMAI published in February stated that 2018 will see a major growth in the number of internet users, which will possibly reach 500mn mark. With the rise in the number of internet users, there are chances that the number of crypto users will also take a positive upturn.
However, India, the cryptocurrency market is in troubled waters. The government is carrying out extensive scrutiny on the legality of crypto transactions and there are chances of a regulatory crackdown on crypto dealings. Citing this as a reason, many millennials are not keen on dealing with cryptocurrencies.
Millennials’ most preferred mode of investment
When it comes to investing their hard-earned money, trust is of paramount importance, which they find with traditional investment avenues:
Banks: Be it a business mogul like Nirav Modi duping Punjab National Bank or banks like Axis bank and Union Bank being charged with penalty for improper regulations or fraud, currently Indian banks are in the news for all the wrong reasons. Yet the whole of India that includes the millennials, position banks as their #1 choice of safest savings for both short-term and long-term investments with a maximum return of 7.2% on an average. Fixed Deposits are their favourite because according to RBI’s rules, bank needs to take insurance of deposits placed by its customers and there is no uncertainty in the investment that yields good and fixed returns in the long run.
Post Office: As per the millennials’ choice,another ‘safeoption for millennials with low risk appetite is the post office. Like banks, post offices are also a favourite mode of investment for the country majorly because it is safe, involves no Tax deducted at source (TDS) and gives a maximum return of 7 percent on an average.
The various Post Office schemes include National Savings Certificates (NSC), National Savings Scheme (NSS), KisanVikas Patra, Monthly Income Scheme and Recurring Deposit Scheme.
For rural India, where plastic money and going cashless haven’t gained momentum like urban India, it is a convenient option for investment as it involves low investment and the poor can open accounts with an amount as low as Rs.20.
Real Estate: The career-inclined millennials don’t stick to one place. From their home location either they shift for higher education or for jobs. As a result, the Indian millennials who are also referred to as ‘renting generation’, reside in rented apartments. But Anuj Puri, Chairman of ANAROCK Property Consultants Private Limited says: “To say that Indian Millennials prefer to rent homes would be a senseless generalisation.”
Indian millennials, consider buying properties and lands a sound option for the long run. When asked why, they replied that in the long run even if they don’t profit by selling, they can utilise it for their own accommodation or rent it and earn good cash. But the millennials who are in their early and mid-twenties doesn’t have the capital to invest in real estate, although they are counting pennies to invest in real estate in their near future.
Giving a brief insight about the same, Anuj said: “Buying a home may or may not make the same kind of investment sense as stock market speculation. However, an Indian Millennial is very apt to consider owning a home as an essential and fundamental basis from which to launch the rest of his or her other life plans.
Also, the regular income of a rented-out second home conveys a much stronger sense of financial stability in India than investments in the stock market. While it is true that like the stock market, the real estate market is also driven largely by sentiment, it is equally true that the real estate market is not nearly as fickle. Furthermore, there is almost never a dearth of demand for rental homes in a country where the largest part of the population can still not afford to buy homes and indeed consists of transient workforces which depend solely on rental accommodation.”
Other modes of investment
After investing in the above three, millennials who have taken interest and keenly observe the market, invest their money in other platforms; they also invest in stock market and mutual funds. But as they have pointed out, it’s not very safe and needs knowledge and constant monitoring.
When it comes to adopting anything new, millennials are always the first in the queue. But their investment trends display an image entirely different from their general open-to-anything-new nature and resort to traditional modes of investment.