Riches within reach
At following rates of return	By investing these amounts (Rs/month)
15%	322	You build a corpus of Rs 1 crore
12%	850
8%	2,865
15%	1,612	You build a corpus of Rs 5 crore
12%	4,250
8%	14,323
Assuming investments start at age 20 and continued till age 60

They understand how the markets work, they follow elaborate market strategies, they fix corpus targets and they read Peter Lynch by choice. No, they aren’t finance wizards. They are youngsters in their 20s who invest with a unique combination of method and madness towards the goal of wealth creation. Their investment intelligence belies their inexperience.

Last year, we had explained how the power of compounding can make the audacious aspirations of the youth come true (Cash Them Young, 22 February 2007). This year, we look at how a small but growing number of informed young investors is putting this to practice and reaping rich rewards. Having inherited the habit of savings from their parents, this generation’s transition to investing has been waiting to happen. The markets offer more and better investing options.

Plus the four-year bull run showed how much wealth can be made from equities. Investors of all age groups are eager to accelerate the growth of their finances in such conditions. And they can learn a thing or two from the young investors profiled on the following pages. We spoke to 20 young investors from all over India and across all income categories.

Their modus operandi of investing has the answers to questions like: how can you be aggressive yet cautious? Bet heavily on one asset class yet diversify? Meet short-term goals without disturbing long-term strategy? To validate our assumption that there is a change in outlook among the youth, we conducted a survey in collaboration with Evalueserve and Greenfield. The message is clear—young professionals want to invest. They are aware of the importance as well as the benefits of starting early.

Just how early is evident from the trend of students turning investors. We tapped into this craze to find out that pocket money is now used to invest in the stock markets. Addicted to equity investing, the involvement and information of students is amazing. In fact, such involvement is the biggest promise of these young investors. As more and more youngsters emulate them, the cult of informed investing should grow. And from good savers, the next generation of Indians might then be good investors too.

 

Why investing is easier for youth

High awareness: Books, media and even school curriculums talk about investing

Insecurity of jobs: The youth earn more but are aware of their job uncertainty and want to build a safety net

Technology: Internet has made research and investing easier and more transparent

Mature financial markets: Evolved and expanding investment options, and lower transaction costs

Equity bull run: The demonstration effect of the record wealth creation in the past four years