According to a report from Computer Age Management Services, which is the registrar and transfer agent of most mutual fund houses, 16 lakh new mutual fund investors in the financial year 2018-19 were millennials between the ages of 20 and 35 years. The younger population currently make up 47% of new investors in mutual funds. Over the last few years, millennials have begun to realise the significance of saving money and investing in it for higher returns. Taking into account the demands of the young demographic, mutual fund advisors are studying and issuing new schemes to address their needs.
This article lists reasons why millennials could spell a brighter future for mutual fund investment.
-
Open to different investment products
Millennials are not particularly inclined to invest in traditional investment products such as gold, real estate or fixed deposits alone. Due to the multiple mutual fund benefits, they are driven towards market-driven products that provide returns based on their risk appetite. They look at investing in products that can help achieve their financial goals faster.
-
The tech-savvy generation
Millennials belong to the ‘always online’ generation. They are tech-savvy and prefer to research the web to gather information or facts. Youth today are eager to learn about various investment options and do so by researching online and picking the one that works best. They are data-driven, and thus mutual fund companies find it easier to introduce their products to them.
-
Higher risk tolerance
Millennials have a higher risk appetite. They are willing to deal with dramatic swings of the market if the returns are satisfactory. Based on this insight, more and more mutual fund companies are launching small-cap, mid-cap and sector funds to cater to them. Many of these funds, especially the IT sector, have offered more than 65% returns in the past.
-
Driven by innovation
Technology has eased life to a great extent, so much so that almost everything is available either through the click of a button or a tap on our smartphones. Millennials today belong to a generation where there is a no-hassle approach in either calling a cab or ordering food, without involving another human being. Looking at the trend, mutual funds are also following a similar path. Through simple, intuitive investment options, fund houses today offer mutual funds without complexity.
-
Early starters
Mutual fund advisors and experts believe one of the most prominent benefits for millennials is that they can invest in mutual funds at an early age and for a long-term investment horizon. The earlier they begin, the better could be the impact of compounding on their returns. By investing while young, they will be in a better position to understand the dynamics of investing and use it to their advantage.
Conclusion
Millennials are recognising the benefits of mutual funds and how regular SIP investments can help them grow their wealth. Plus, they can start a SIP for as low as Rs.500 and begin their investment journey. As a new investor if you are looking to invest in mutual funds online, now is the right time.
