Why are millennials better at handling risk

Millennials get a bad rap for frivolous spending and irresponsible financial behavior. Yet, this is a generation more financially aware than most previous generations. India is home to over 500 million millennials aspiring for financial independence and ready to take the risks needed to get there.

Previous generations were extremely cautious about taking risks when it came to investments. Conversations about money, if they happened at all, largely revolved around spending less and saving more rather than investing. This also had a lot to do with the financial options and information that was available at the time.

Earlier, if you wanted to invest in the stock market, you would have to go to Mumbai, visit the stock exchange office daily and physically make trades. And if the trip to Mumbai was not feasible, then you would have to spend hours on calls with brokers to ensure your trades are done.

Unless you were closely following the markets and knew where to get data from, it was near impossible to acquire the kind of market knowledge needed to make well-informed investment decisions.

Additionally, many of today’s established private banks were in a nascent stage back then. They needed to build public trust with themes of safety and security. To do this, they focused marketing campaigns on the promise of protecting capital with high interest rates through fixed deposits. Despite the existence of mutual funds, even the concept, let alone the benefits, remained alien to most people as FDs grew in popularity.

As technological innovation advanced over time, access to the markets and financial information became increasingly more available. Where earlier you would have to largely rely on brokers and experts, today you can easily make investments in a wide range of options online.

Millennials have embraced this innovation in fintech as banks and financial institutions upgraded their products and services to meet their expectations. Apps like Fi Money have taken this a step further by providing everything from banking to investment services in one place.

The government and financial regulators have also been proactive in ensuring that all stakeholders benefit from the pace of innovation by introducing new rules and updating older ones to keep up with the latest trends.

For instance, today, it is mandatory that mutual fund companies disclose the level of risk their funds entail so that investors are aware of exactly the kind of risk they are taking on.

Thanks to the plethora of financial information available online, millennials are a lot more risk-aware than previous generations. While one might say that the vast number of financial products available can cause decision paralysis, simply doing your own research into all these options will acquaint you with the various types of risks associated with the market.

But knowledge of risks associated with different market instruments is only one half of risk awareness. You must also have a clear understanding of your own financial position to make an informed investment decision.

Being fully risk-aware is a major advantage when it comes to handling your own finances rather than letting third parties do it for you. The Fi Money app comes with powerful AI-based analytics to help you keep track of all your money from multiple bank accounts in one place.

The pandemic played a major role in driving more Indians to the stock market. The number of active demat accounts jumped 63% in FY22 to 89.7 million, according to reports. Discussions and mentions of topics related to finance and investment have greatly increased across all social media.

‘Buying the dip’ became a popular term to describe the movement of taking advantage of the pandemic-induced price crash in various market assets and avoiding panic-selling. Such social trends provided a live example of the benefits of staying invested for the long term.

These trends were aided by financial platforms that remove the friction involved in investing, allowing you to manage your finances with ease. From setting up daily, weekly and monthly SIPs to automating payments and setting spending limits, apps like Fi Money give millennials the opportunity to invest more and take calculated risks to grow their wealth. Download the Fi Money app to invest online with ease.