Gen Y spends like there is no tomorrow but remembers to save for tomorrow too, says Reshma Krishnamurthy Sharma

Generation Y might be lacking in many areas but what they don’t lack is money and that vital quality that often does not accompany riches – wisdom to save it.

Everything happens a decade early to this generation. Dating, falling in love, getting the smarts, getting married, divorcing and making money. Married couples or those living together have everything going for them – a house through a house loan, a car through that easy scheme car loan and cash to spend. Though their principle in life seems to be ‘Jiyo Aur Aish Karo’, there is, fortunately for the investment advisors, an underlying desire to save for the future, to invest now, so that they can continue to live life kingsize long after they retire. So whilst life is on a fast pace, the trend that is steadily catching up with young married couples is the ‘invest early’ mantra.

Never before have couples thought of investing as early as in their twenties. Even the form and structure of investments has seen a great change. Earlier, people would invest in limited options like real estate, fixed deposits, gold, pension, PPF and others. Today, new age options abound – right from stocks to real estate to the ubiquitous mutual funds, insurance et al.

Investment savvy

What has made the youth more investment savvy than ever before? There are many reasons for couples to think of investments soon after they marry. For one, both husband and wife work and their awareness about money matters, especially taxation and the ways to go around it, increases. There is also an easy flow of cash, and the growing economics of the country too contributes. Couples have a fairly good idea of how they want to plan their family life and when to retire. Securing the family is a major concern for these youngsters. Typically, an insurance policy is one of the first forms of investment as it covers life risk and offers steady income for retirement years.

A N Pruthvi, a young staffing manager at Microsoft India says, “since independence and more so, in the last ten years one has seen tremendous growth in the economy and this definitely has stimulated the younger generation to look at aspects like wealth generation more seriously.” His wife Roopa Rangaswamy, who is also an HR professional, adds, “even double income acts as an added booster if you want to go in for bigger investments and want to have diverse options. ”

Speaking on the awareness level amongst people, Ravi Rao, Assistant Vice President, iGATE, comments, “these days one finds that people are very much aware of retirement needs. Even among the investment options, selective choices like insurance have taken a new meaning. Also, one can clearly foresee the returns on each investment option. If it is stocks, it could be short-term or long-term benefits, whereas in real estate to get the returns one has to give at least three years of time.” Elaborating further, he says, “Though gold, has stopped donning the primary role in savings, if one watches the international market closely, gold is not a bad choice, provided you are willing to wait for about ten-twelve years on its returns.”

Security blanket

One more added reason as to why people are going in for early investments are that people want that blanket of security during their retirement years. Voicing his opinion Praveen Kumar V, Manager-Sales, Kotak Life Insurance, says, “ the entire perception of savings has changed since the past couple of years. Earlier, people had this strong notion that children would take care of them in their retirement years but today nobody wants to leave their future unsecured and dependent on emotional chords.”

Most couples feel things don’t remain the same forever. One has to invest at the right time and the right time is when you are young.

This becomes more important for those with sober incomes. Prashanth Kati and wife Sushma Kati, both working as technical support in Wipro, say that starting early on investments translates to lower load on per year savings. So it is not just those families that come within the bracket of high or double income groups that go in for early investments. “Even if one is on a medium scale salary, earning between Rs 10, 000 – 15,000 per month they can opt for options like mutual funds,” says Sushma.

Within the sphere of investments there are classifications like short-term investments and long-term investments. If one is looking at quicker growth then stocks are a good option, as they play on high risk-high return game. On the other hand, the dynamics of property investments count on the low risk factor but nevertheless it is a long-term investment.

Popular investments

Though real estate and stocks feature among the popular forms of investments for double income families, not to lag behind are insurance schemes, which many find helpful for long-term returns and savings.

Among other options, mutual funds are becoming increasingly popular with investor savvy couples in metros.

With monthly investments for as low as Rs 500, couples in the income group of Rs 5,000 onwards can think on specific choices like mutual funds and insurance. Both offer convenient investment options and systematic investment plans.

So, while the ones who have bigger pockets go in for real estate shopping, the others are gradually realizing that it’s time to make their investment kitty bigger.

Have you counted how much there is in your kitty?

Funny money!

• We can tell our values by looking at our checkbook stubs. ~Gloria Steinem
• There is a very easy way to return from a casino with a small fortune: go there with a large one. ~Jack Yelton
• My problem lies in reconciling my gross habits with my net income. ~Errol Flynn
• Car sickness is the feeling you get when the monthly payment is due. ~Author Unknown
• I am opposed to millionaires, but it would be dangerous to offer me the position. ~Mark Twain
• They who are of the opinion that money will do everything, may very well be suspected to do everything for Money. ~George Savile
• There’s no money in poetry, but then there’s no poetry in money, either. ~Robert Graves
• When I have money, I get rid of it quickly, lest it find a way into my heart. ~John Wesley
• The only reason a great many American families don’t own an elephant is that they have never been offered an elephant for a dollar down and easy weekly payments. ~Mad Magazine
• I’d like to live as a poor man with lots of money. ~Pablo Picasso
• No matter how hard you hug your money, it never hugs back. ~Unknown
• A bank is a place that will lend you money if you can prove that you don’t need it. ~Bob Hope
• Money is better than poverty, if only for financial reasons. ~Woody Allen

This is how to retire happy

Planning to retire early? If you are retiring in the next 20-30 years, you will approximately require Rs 1.3 crore to live in comfort. This figure is based on realistic estimates and is not impossible to achieve. In fact, saving around Rs 3,000 a month does the trick. The rule of thumb is that about 80 per cent of current expenditure will be needed to meet expenses after retirement. Budgeting for retirement is, therefore, a crucial exercise that requires much thought. The size of the nest egg depends on a number of factors – when you are likely to retire, your life expectancy and the standard of living you are aiming at.

Make a realistic assessment of the number of years you might live. Draw up a list of post-retirement expenses such as housing, healthcare, leisure, travel, household expenses and hobbies. A list of current expenses can be a guideline. Figure out which of these will fall or rise after retirement, allocating roughly 80 per cent of your present expenditure.

Remember to include external factors like inflation in this calculation. For instance, if your present monthly expense is Rs 15,000 per month, after 30 years, with an inflation rate of 8 per cent, this figure would be around Rs 1.8 lakh!

Health is wealth

Medical care is expensive and an unexpected illness could upset your financial calculations. An annual premium for a medical cover is something everybody ought to consider. The first step is to list your health risks. Consider your family history, work, environment, age, stress levels, occupation etc. How serious are these risks? Will they change as you grow older? Monitor these risks throughout your life. And based on this assessment, get a medical insurance cover. Health risks increase with age. The longer you put off buying medical insurance, the more expensive it becomes, because premiums are higher for older buyers. And after retirement, when you no longer have an income, you don’t want to have to pay up big sums as premiums.