In college and pursuing graduate courses; food, accommodation and other expenses paid for by parents, popularly referred to as Gen Z; but the kids themselves most likely will not have any investible surplus. So where is the question of investing? It’s the parents who want to start the kids on their compounding journey and want to give them the invaluable gift of time (and money !) to let the investments grow. The idea being that once the kids start earning, they can continue to build on the foundation.

It’s a fantastic concept. The parents, Gen Y, would have started saving and investing only in their 30s after they completed their studies and landed a job; after committing the usual mistakes of taking on unwanted insurance polices in the name of getting tax deductions, borrowing and paying off loans, running up credit card bills. In the course of their trial and error method of learning about creating wealth, they have discovered that staring early in the investment journey helps. And so they want a different savings trajectory for their kids.

And so what are the viable investment options for starting off the Gen Z’s compounding journey ? The portfolio should be simple, very basic, plain vanilla, but should have both equity and savings. This helps in two ways, one the kids can compare the growth from equity and pure savings and two it provides an insight into the basic concept of asset classes. And the investment avenues are:-

[1] Domestic Index funds

[2] RD (Recurring Deposit with a bank) or PPF (Public Provident Fund)

This is not an idea by High Net worth Individuals (HNI), but the middle class. The middle class often prided on providing their kids the best and affordable education to jumpstart their career. And now along with education, the parents also want to provide their kids a financial foundation which they can grow.

An enviable start, money and education. Kudos to the parents !!

But going forward, it will become necessary that investments should also should be professionally managed and the financial advisory services should be made available to all, not just the HNIs.

Till next post, take care !!

Diclaimer: This is not investment advice, but only an opinion piece. All investments are subject to risks and please ensure due diligence before making investment decisions.