5 mins read . 23 Jan 2023
What do we understand by the millennial generation? It refers to the generation born after the 1990s, so in a way, they are the kids of liberalization. That means that they have grown in an extremely technologically savvy environment and have no connection with India’s socialist past. They are either at the start of their careers or growing in their careers.
If one looks at the rapid growth in the number of Demat accounts in India, it can be attributed to the large number of millennials that have come into the Indian equity mainstream. They represent the new generation of investors who are willing to take a calculated risk in their investments and also want to do it by themselves. Here is what distinguishes millennials in the equity markets from others.
The big advantage millennials have today is that stock markets are literally available at their fingertips and they are really not complaining. They are making the most of user-friendly interfaces, easy-to-use apps and a mobile-friendly trading system. Not surprisingly, even brokers are turning over to become mobile-first broking houses. The convergence of technology has made it possible for these millennials to complete their entire financial tasks on the mobile interface itself. Today, it is possible for a millennial to create a financial plan, allocate funds to equities, screen stocks, execute transactions, and also affect bank debits and credits through the same interface; apart from Demat debits and credits. This situation is tailor-made to their technology-savvy inclination.
Millennials may not exactly be penny pinchers, but they are certainly the ones who seek value for money. They would rather pay only for services, where they can see a value proposition. For most millennials, the low-cost discount-broking model holds a lot of allure. However, they are also open to full-service brokerage, provided the value proposition in the offering can be articulated and communicated to them in clear terms. Many of them prefer clear segregation. For instance, they prefer segregation of execution from advice and they also prefer segregation of investment from insurance. Millennials are also extremely conscious of the fact that beating down the cost of the transaction by a few basis points can make their entire transaction a lot more meaningful.
The best thing that the stock market offers today is the benefit of gradual but systematic wealth creation. Today it is possible to adopt a staggered and structured approach to wealth creation through regular investing, which is popularly called the systematic investment plan (SIP) approach. Millennials have a choice; they can either do systematic investing through direct equities or even indirectly through equity funds. Systematic plans can be structured to take care of most of their goals. Equities work best in the long run and these millennial investors are best poised to leverage on this equity edge.
Millennials prefer to do it themselves. They are not averse to advise and expert counselling, but they would still prefer a platform that gives them the best of automation. Some of the new-fangled ideas that appeal to the millennials include Robo advisory, artificial intelligence-based investing, machine learning wisdom in financial planning, off-the-shelf customized portfolios etc. For the millennials, equities are fascinating because they are long-term wealth creators and they are amenable to do-it-yourself (DIY) execution. That is what makes the stock markets so special for young millennials.