Five checkboxes for young investors before diving into financial markets

It’s always a safe bet to start small and grow as you go. Measure your risk tolerance level meticulously and decide where to put your money.

financial planning, wealth creation, financial management, Automated Financial Assessments, Financial Health Check-up, Financial Strength Analysis
The outflow was triggered largely on concerns over the country's economic growth and the escalating border tensions between India and China.


India’s millennials are steering a windfall in the investment space as millions have flocked to the stock market during the pandemic. In September 2020, India’s leading securities depository CDSL (Central Depositories Services India Ltd) recorded an unprecedented 25% rise in Demat accounts, resulting in a record peak of 2.5 crore accounts. What I find even more interesting is that a majority of these new accounts were opened by youth aged between 25 and 39.

Online investment platforms have witnessed a similar upsurge, with more and more homebound youngsters wanting to test the proliferous waters of capital markets. This massive inflow is enabled in large part by regulatory bodies that have progressively made the market broader, more accessible, and transparent. Thanks to recent initiatives, it takes no more than a few minutes to open an account, complete one’s KYC online, and start trading.
While this degree of wide accessibility is a boon, it is critical to couple it with deep sensibility, so that young India makes the most of everything the stock market experience has to offer.

Young investors already have the leverage needed to level the playing field with the best in the business, given the right guidance and support. From investing early and regularly to developing a long-range view of growth, here’s a quick list of boxes these enterprising youngsters should tick off before they dive into financial markets.

Five checkboxes for every confident investor;

Set your goals

Whether you’re fresh out of college looking to make a few extra bucks for that new smartwatch, or determined to seal that condo deal before you hit 30, it is essential to precede your investment journey by defining clear goals, both short- and long-term. Remember to be true to yourself and don’t sell your dreams short.

Measure your risks

Before taking the plunge, gauge how deep you’re prepared to go. It’s always a safe bet to start small and grow as you go. Measure your risk tolerance level meticulously and decide where to put your money. Dreams come from the heart, but this step is all about the head. Know when to listen to what.

Diversify your assets

It is no secret that the stock market is prone to hurricane-sized upheavals. Diversification is a good tool to protect against what you do not know. While you may not be able to avoid risk entirely, with a few wise choices you can certainly control it. Make sure your portfolio is not dependent on any single company or industry. The idea is to stay on track and meet your goals. Whatever the tide of the market, don’t lose sight of that vision.

Temper your expectations

96-year old American investing giant Charlie Munger quips, “The big money is not in the buying and selling, but in the waiting.” He’s right. As a species, we’re quick to expect big returns and, when we don’t see them, just as quick to throw the baby out with the bathwater. This is why a majority of traders and investors fail to survive beyond their first 6 months in the market. Especially for the young and restless market enthusiast, it is crucial to hold tight to your strategy and patiently fix your gaze on a long investment horizon.

Start yesterday

Not enough can be said about the importance of this most overlooked checkbox. Start investing while you have time on your side, or kick yourself in the shins tomorrow. There is no money to be made in procrastination. Start small if you need to, but start somewhere, and commit to it every month. If you pick quality assets, invest regularly and wisely, and prepare to stay for the long haul, you will soon watch the wonders of compounding unfold before your very eyes.

As markets pave the way for this bold new generation of traders and investors, I find it imperative to provide them with not just good advice, but sound intelligence and skills to navigate the complex currents of the market with calm, measured confidence. With a keen learning attitude and the ability to make informed decisions, I am convinced Indian youth can transform these adverse times into an opportunity to become confident investors and capable wealth creators.

by, Amit Dhakad, Co-founder, CEO, and CTO, Market Pulse. (A market analysis platform and stock market app)

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First published on: 29-10-2020 at 16:23 IST