Today's young generation has earned a nickname for themselves as spendthrifts. The parents of these young people who know the value of money are often worried about their spending habits and they desperately try to advise their wards about the importance and value of the hard-earned money. Some of the youngsters do listen to their parental advice and park their earned money as suggested by their parents.
But most of the people of the older generation advice their children to invest in the traditional form of investment tools like saving deposit scheme, fixed deposit, recurring deposit, insurance plan, purchase of gold, assets like house and so on. But is it worth to blindly go by the parental advice or is it better to do some basic homework by doing some research work before setting off the investment journey?
Let's check the list of parental financial advice which may not suit the present generation.
Lack of Knowledge about New Investment Avenues
The older generation will have limited or lack of knowledge about new investment avenues and this acts as a drawback while giving financial advice for the children.
Today, the market is flooded with an array of investment options which suits almost all kinds of investors and one should know each of them and choose the ones which best suits them to reach their set financial goal.
Gone are the days when the investment was just limited to investing in post office deposits or bank deposits. The advancement of time has bought in an array of new products to the investors ranging from equities, debt, mutual funds and so on.
First, fix a financial goal and the time to achieve the same. Calculate the expected returns from different forms of investment and let the children choose the investment avenues which will give the desired results and have minimal risks associated with the portfolio.
Buying or Construction of House
We Indians give more prominence to owning a house and it is most of the people's lifetime dream to build or purchase a house. But the same idea may or may not go well with your children who have just begun their career and are looking out to explore success and growth in their jobs.
As the young generation is more enthusiastic, they may have their plans to move to different parts of the country or even try their hand to go abroad and settle down.
Hence it may not be a good idea to push them to buy a house as it would be a financial liability which will be a burden on them at the initial phase of their career.
It is better if they can think of purchasing an asset at a later part of their life when they start earning more and plan to settle down in life.
Lack of Preference towards Building Retirement Corpus
Previously, some of the older generations were employed in a government job and hence post-retirement they used to get a regular payout in the form of pension and those who were not having a government job used to rely on their children's salary post-retirement. So, it was easy for parents to balance and achieve other financial goals like funding children's education, meet marriage expenses, purchase of a house and so on.
But the changing environment has bought in an array of changes to the lifestyle of today's young kids, the family structure that it may not be possible to support their parents or to depend on their kids once they retire.
Thus, building a retirement corpus since the beginning of the career is a safer bet and many youngsters should opt to necessitate a different investment strategy and safeguard their future financially strong.