Zillennials seek financial protection amidst COVID-19 crisis

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The financial crisis caused by the COVID-19 pandemic has pushed zillennials into investing as the data from investing platforms show that workers between the age group 20-30 are seeking financial protection.

Zillennials and young millennials were associated with an urge to spend on lifestyle expenses a few months ago. However, more and more people from this category are becoming serious about investing due to the fear caused by the financial crisis induced by the COVID-19 pandemic.

Zillennials are individuals born between 1996 and 2015 and young millennials are those born between 1990 and 1994. Groww recorded a 400% increase in the number of transacting users between the age group of 20-30 years from 1st March to 10th August as compared to last year. Zerodha had more than 5,84,000 customers between March and July 2020 between the age group 20-30 years as compared to 1,23,000 investors in the same age group in the same period in 2019. The Mutual Fund platform Zerodha Coin witnessed a similar trend.

A push to invest and plan for financial security was created as the financial crisis created by the COVID-19 pandemic set in. The behavior of young workers is currently being dominated by fear. Cancellation of job offers, pay cuts, layoffs, and bonus deferment is instilling fear.

A tendency to save more is created post lockdown among young people as they have fewer liabilities and dependents and discretionary expenses have gone down. 80% of the user base is under the age group of 35 for Zerodha Coin. The importance of protection and diversification and the need to understand how different investment avenues work must be understood during this crisis.

It is important to ensure diversification by investing in a combination of debt funds and equity funds (domestic and international) and gold. It is important to align the investments with the goals of investors even though visualizing the goals for young investors is difficult. For the short term (less than two years), medium-term (two to seven years), and long term (over seven years) goals, the proportion of investment for investing is 15:25:60, and six to eight months` worth of expenses should be kept in emergency funds.

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