Why younger people are not investing

It gets me worried that many youngsters are today not investing. Just not investing. A person earning Rs. 12L ctc is doing a Rs. 3000 SIP started when she was 23 years of age. No change in amount or increasing the SIPs.

Not only in India, even abroad…here I am quoting an American website:

“A Gallup Poll released recently indicates that fewer than half of all households led by people who are 35 or younger own any equity funds or stocks. What that tells me is that young people are not putting money aside for their future. What are they going to do when they reach retirement? This question scares the daylights out of me. Just to give you a sense of proportion, that investing participation rate was 30% back in 1963.”

I can understand that life is perhaps more difficult today for the 32 year old than it was for us when we were younger. There are more attractions and distractions. Honeymoon in India is unheard of even for the person earning Rs. 500,000 ctc married to a girl earning Rs. 230,000. There is no concept of a ‘simple marriage’ – perhaps the parents fault?

Also most of the 32 year olds are worried about job growth, job continuity, and jobs shifting out of the city of choice to a different location. Many call center jobs have moved from Gurgaon and Mumbai to smaller cities like Coimbatore and Tirupati.

The other reason is fear. What the market will do over a long period of time is NOT a question that the millenials are able to understand. No financial education effort is being made to teach them the advantages of starting young. For every rupee that you invest at age 18 you would have had about Rs. 35 at age 65. Not bad, right? If you invested Rs. 40 a day from age 23 till age 60 you would have a corpus in excess of Rs. 4 crores at the retirement age.

DO YOU NEED MORE STRONG NUMBERS STORY to believe in the power of compounding. 

Despite change of governments, wars, famine, drought, assasinations of Prime Ministers while in office, terrorist attacks, – markets have gone up from 100 in 1979 to about 26,000 today in 2016. Why do you have to worry about short term fluctuations? let the media get orgasmic about the daily variations. Be the long term player who is here to make money.

Learn about investing and take your time. You do not need to know everything on day one. Don’t try to master Investing before you start. Stick with broad based large cap funds or low-cost mutual funds and don’t worry too much. Just get going. Just Do It, as Nike would say. The good news is that because you are investing small amounts of money in the beginning, you really can’t make that bad of a mistake.

Young people have greater challenges when it comes to investing. Make it happen and force yourself to get started regardless of the amount and learn as you go. Ask me a query on the blog or on FB or if you know me, call me.

You wan’t a blunt answer? My experience tells me that the greatest challenge to overcome is inertia – not resources or understanding. We have even given this a sexy name: Status Quo Bias.

Get off your but and make that first investment.


Are you going to start investing? When?


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12 Responses to “Why younger people are not investing”

  1. Inertia as you mentioned is the biggest problem.

    An equally big factor i feel is the Time period required for compounding. Nobody has that kind of patience anymore, young people want everything Today!, who is going to invest for 2 decades to make money???

    Even after Subra sir drills us with idea of staying invested for long periods every few posts, i still wonder how many people reading will actually do that?

    I am in my late twenties, been doing increasing SIPs since 6 years. In all those years i have been able to convince ONLY 2 people my age to start doing SIPs.
    After incessant bugging they did start but are only investing < 1% of their monthly income. Even if they keep that up, its not going to amount to anything!

    Young people!

  2. The other problem is convincing spouse. In today’s age of stree mukthi, you simply have to leave it to them about managing their finances. I have failed miserably to convince my better half about long term investing. She is commerce graduate, works in a state own bank and BELIEVES in FD. 🙁

  3. I have seen many people procrastinating their decision to start investing at an early age and when they get married (also when their children are born) and their responsibilities get increased, THAT time they think of starting investing in stocks/MFs with an expectation that it will make them rich quickly. This expectation hurts a lot of people over short period of time and then they blame stock market’s behavior. Heard many people saying statements like:

    1) “Yeh stock market apne bas ki baat nahi hai, yeh sab punter logon ke liye thik hai” – Someone who got his hand burnt due to short term volatility

    2) “Bhai tera kya hai, tere pass stock mein dalne ke liye bahot paisa hai” – Someone saying this to a disciplined investor thinking that investment in equity/MF requires lots of money

    3) “Is se accha to main FD mein paisa rakhta tha, paisa safe bhi rehta hai aur return bhi guarantee hota hai” – Someone who does not understand inflation

    and many more… 🙂

  4. The question is if younger people are not at all investing or not investing enough in equities. It will be very hard to make the first generation kids to believe in stocks if their parents keep on saying its is very risky investment. My wife is of that nature and she first invested in real estate and invested only a small portion in equity.. Now she is 13 years in her career and in the past 2-3 years she started understanding more on equity investments and a firm believer that long term investing is better than any investments. Now she is even ready to sell her house and split into debt and equity. The point is give the younger generation or spouse a good period of time in their earlier career to make them understand even with a smaller investment.
    In my case if you look at her real estate investment has gone up 4 times in the last 10 years and still that small portion of equity she is now a firm believer on long term investing…

  5. One of the biggest problems for youngsters is that there are no role models or mentors when it comes to personal finance. Each one lives their own life, unless they come from a business family. Here parent’s don’t talk to children about money, spouses among themselves don’t talk, friends very rarely talk about personal finance. No one shows them how to build wealth, nor do they want to learn.By the time he/she earns well in his mid thirties, they would have a home loan, car loan and other expenses, which keeps them occupied with no money/ time to think about investing.

  6. Santhosh stop blaming the world. The world does not owe you a teaching or a learning. Invest or perish. Choice is yours. Why is asking YOU why you are not investing? NOBODY cares, so who will have to do it? YOU, YOURSELF and YOU alone.

  7. Subra,

    Thanks for encouraging young people like me to start investing for better life ahead. I have started investing in my late twenties.

    I have a Jivan Anand LIC policy of 5 lac for 20 years time period, paying Rs. 6388 quarterly since last 5 years. After reading your blog, I am convinced to take term insurance rather than an endowment plan.
    I am confused if I surrender this policy as surrender value is 30% of total premium paid till date excluding first premium or should I paid up. I appreciate your valuable suggestion.

  8. you know what subra??..
    if you try to pursue todays youngsters to save/invest..you would surely be touted as “kanjoos” in your social circles. people will start asking questions..”itna paisa bachaage kya karooge?”
    this is from my personal experience..

    this is more so for retirement…
    we get the same old amswere…it is still 35/30/25 yrs away..
    people are fully ignorant about two major potential reasons of “forced retirement/semi retirement”….health and automation…

  9. every day I get mails thanking me for telling them to stop their endowment and shifting to term plans. I get kids thanking me for saying ‘u can use ola or uber u do not need a car ownership’..tons of good mails.

    i am sure that there are many kids who save and invest diligently. I am sure that many many more kids do not. I am like rain or sun – i just go on doing what I have to do. No clue who benefits and who does not. Completely indifferent. To me what they think or say does not matter. If it does matter to you …do what matters to them 🙂

  10. Dear Subra Sir,
    Few days back , I had commented on a post and my choice of words led to a slight misunderstanding about my intentions of posting.
    I was wondering if you would like to analyze my investment decisions till date as another sample ?
    If yes, please let me know the how (format, if any) should I submit a brief summary to ensure clarity and avoid taking up too much of your time.
    I do not use FB, so thought comment here might be best way to reach you.
    Basic Background: Age 31, Programmer(software) by profession.

    Would be grateful to get practical and straight-forward advice from you. Feels a little awkward considering the small numbers involved, but not requesting at all feels even worse.
    Already read your book (Rs 40 per day),so feel more comfortable sharing the numbers for analysis if you agree.


  11. prasoon anand on May 17th, 2016 at 11:06 am

    Financial education is like Sex Education .
    While every body is interested in first word only , no body really cares about later , which leads to chronic , noncurable health and wealth ailments for life .

  12. Your articles are very good and worth reading.

    I just require your consent, can you please advise if I can share your articles on my facebook page or other popular sites. I require your consent, Sir.

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