Four hacks for Gen-Z to effectively change their financial gears

For the generation born into the technology and information age, it is almost imperative to use technology for investment success.

Here is a person who loves to drive in the fast lane but takes it slow. He loves to take risks but doesn’t like to gamble. He’s ready to work hard but refuses to work through the weekend. He loves keeping up with fashion and food trends, but he won’t be without suits and good wine. He has an active Tinder profile but is looking for true love.

If these attributes seem relatable, you are likely part of the powerful Gen-Z – the generation that has the lion’s share of responsibility in building the world for much of the century.

For the generation comfortably nestled between FOMO- and YOLO-induced priorities, decision-making is not easy. And not when it comes to financial decisions.

While the generation has to carry its weight and make careful financial decisions, here are a few tips and tricks that can make life easier, at least from an investment management perspective.

Technology is what technology does

For the generation born into the technology and information age, it is almost imperative to use technology for investment success. While the overwhelming number of digital investment platforms could spoil the choice, it’s important to choose one that goes well beyond a pure transaction platform – you need to look for a platform that will assist and / or guide you in making the right investment decision. Think robo-advisors.

Born in the information age, you might be tempted to use all the freely available information to jump straight into investment decisions, don’t you! Unless you are ready to learn the art and science of investing, it is in your best interest to seek advice directly from professionals or from digital applications they operate.

If this is your first time investing and believe you have discovered an underrated opportunity, it may be one of three cases – you are a genius, or the opportunity is not underestimated, or, as in most cases, no opportunity.

Automate the good things

Gen-Z is blessed with convenience in all activities, from delivering groceries to being able to purchase them with a “free EMI” that is automatically withdrawn from the bank after a month. If the repayment of free EMIs and entertainment app subscription fees can be automated, there is no reason not to do it with investments.

A useful life hack is to commit to a monthly investment plan in a mutual fund or other instrument that has the ability to set the automatic charge date to a date before lifestyle expenses begin to be withdrawn from your account.

Note that most banks will impose a fine if an automatic charge fails due to insufficient funds. The best way to invest and avoid the penalty is to set the amount so that you have enough to spend and make sure you are not spending money that you cannot afford. Don’t be put off if the amount you can invest is too small; this will help you in a non-monetary way.

Self-discipline is the best form of discipline

For the generation that loves to put up posters about fast movements and breaking things, discipline is more about engagement than rules. Inline, just to keep yourself in check, it is advisable to invest in products with lock-in. You don’t have to look for very long lock-in periods, just good enough to keep you from delving into your investments for that impulsive purchase. Invest your money in long-term engagement.

It is natural to worry about an “I-need-money-in-an-emergency” situation; To do this, you have to invest separately in another instrument that is low-risk, yield-optimized and liquid.

Long-term investing is not the same as dormant investing

While you must always invest for the long term, it is almost imperative that you are also aware of developments that are affecting your investments.

If you are an impulsive person, this tip is best ignored. The likelihood that it is better not to review your investments (especially capital market linked products) is almost more likely if you succumb to impulsive behavior. However, if you can keep an eye on the portfolio and resist the urge to act when it is not necessary, it is highly recommended that you define a fixed frequency for portfolio reviews as well as the establishment of parameters for the evaluation and decision-making rules.

It’s okay to be impatient for your food delivery, but you don’t have the same virtue in investing. You don’t want your investments to have extreme flavors like fast food; You want it to be delicious, yet digestible, like a gourmet meal – and gourmet meals take time to prepare. Be efficient and in no rush to build your finances.

by Nirav Karkera, Head of Research, Fisdom

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