Last Updated on December 29, 2021 at 12:18 pm
Happy holi! In this guest post, Pratik Jain discusses the issues and problems a typical young investor fresh out of college faces. You may remember Pratik from his previous post on How to do Online KYC via ETMoney to start investing in Mutual Funds. I am so thrilled that young people less than 25 take an active interest in money management. They also put to shame for I wasted all the money earned in my 20s: The Financial Arrow of Time.
Pratik is a final year student of computer engineering and interested in Technology, Coding and personal finance. This is part of “freefincal reader story” series. Read the full archive here. If you wish to share your personal finance story, send me a message. Over to Pratik.
Spending vs Saving
This problem starts from the day you start getting your pocket money. How to save money and control spending always remains one of the top problems for youngsters. I was frugal by nature, but many youngsters spend money on weird things. Most of us spend due to two reasons one is impulse buying and second is peer pressure. I control impulse buying by simply delaying the buying, it is not so easy but if you really want to stop you have to have control of yourself.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
Many of my friends start uninstalling apps like Paytm, Amazon, Zomato because they spent too much on it. If you are one such person then let me tell you that app is not a problem you are the problem! One way to control it is to start saving for something big such as a Bike, Laptop or something, One of my friend did this and when he finally accumulated target amount he didn’t buy that Bike. If you can’t stop your habit then stop reading the article here, because you might face bigger problems than managing finance in future.
Another big challenge is Peer Pressure, Let me give you an example of this. I don’t know if you are aware of this new trend or not but many youngsters are paying for photographs to post on Social Media, Rate of such pics clicked with DSLR is average 100rs per click. Many peoples are spending 1-2k per month on this, and this is not enough so they also buy likes on these social media pics. No one among my friend circle has impressed a girl with these over-edited pics. It’s not that all these peoples are aspiring models, this is simply because of Peer Pressure.
This is actually a game of show off, and this is the reason I decided not to post any pic on social media ever. If you do something and post it for showoff that’s great, but when you start doing stuff for show off that’s where the problem starts. The only way to avoid it is to stop playing this game of showoff! Believing in delayed gratification is the first thing you need to start Investing.
How it all Started
A few years ago I read “Rich Dad, Poor Dad” book, and after reading that book I felt so motivated that I started thinking of plans to make money. Certainly, those plans were not practical, and I didn’t know how to make practical plans which will work in real life. Last year I got placement in an IT company, I was happy but soon I realized I have to pay taxes on this so to save taxes I googled. Just like many people I came to know about Mutual Funds because of ELSS and joined many FB groups to understand the concept.
When you search randomly, the possibility of you getting a correct source of knowledge is very less, the same happened to me. Reading Posts and comments about random people’s problem in public forum will only add to your confusion. It took me one month just to get used to terminologies in personal finance. Only right thing I did then is never asked about the best fund to start SIP!
Learning the Basics
In learning anything mentor plays a vital role, it’s not that we can’t learn without the help of anyone but having the right direction is very important to reach the destination. Just another day I was trying to figure out what is the difference between debt and equity one person asked if you seriously want to be a DIY. That was the time I met Ananth sir, he taught me and a bunch of other people’s about the basics of personal finance. He started with the meaning of index, types of index, mean, standard deviation, alpha, the difference between trailing and rolling returns, Asset Allocation, selecting mutual funds and many more concepts.
We are lucky that there are a lot of forums, Youtube channels, and websites like Freefincal available for us to learn these basics. Only thing is we should be able to differentiate between right and wrong information out of this by thinking logically and rationally. Otherwise, there is an equal risk of getting trapped into wrong products. Freefincal is more than enough source of information to learn anything, even the complex products like Health Insurance are explained in a simplified manner on Freefincal. On a public forum, we need to take extra caution as there is a high chance of you being a customer of agents.
Why DIY?
When you are young there are chances of getting growth and opportunity in your main job, then why study personal finance instead of focusing on the main job? I am being asked this question many times by myself and my friends. I can always outsource the job of managing finance to a fee-only advisor and focus on my main job. But if I don’t understand the difference between good and bad investment I am completely dependant on advisor’s honesty and ethics.
There is no guarantee that they will not push you towards bad products, so at least to check if you are on the right track you need to learn basics. When you are young and unmarried you have enough time to handle your main job and learn about personal finance. So after learning, I decided to be a DIY because I understand personal finance is not equal to self-brain surgery as many of them try to project. I don’t recommend being DIY to everyone, but I recommend everyone to learn personal finance, especially when there are so many resources available and you have time on your side.
Taking the First Step
Faith is taking the first step even when you don’t see the whole staircase. I had a feeling that first, I will learn everything and then will start with a full proof plan. This is the feeling almost all newcomers carry. Everyone is waiting for the best time, best strategy, best fund. I was also waiting for a significant amount to come into my pocket and then I will start with the best strategy. But, to reach the goals what matters more is Start and not the Best Start. Deepak Kaltari always pushed me to start and not wait till you master the Personal Finance subject.
Unlike most people, if you know many things about finance before making any investment it is the most confusing thing that where to start. When you are young you might also think that I can’t make money by investing such a small amount. Perhaps you are right, I used to think the same. But there are many other positive things you can get because of this. You will get used to investing and volatility in equity, which is hard if you start with a big amount. You will develop a habit of investing which is the most important factor to reach goals. So instead of waiting just start with whatever you have once you understand the product, don’t wait for best.
Learning and Unlearning
After investing I was checking index twice-thrice a day straight for 10-15 days. I was even monitoring indexes where I haven’t invested yet. Soon I realised, I need to get rid of this bad habit and start learning and unlearning new things. Learning is a continuous process so whenever you get time, start to learn from good sources. While I will continue to learn about new things in spare time but my aim now is to focus on the main job. Being a young investor you should give more importance to your main job. Stability and growth in the main job should be your priority.
The worry of the market will only disturb your mind negatively, Real Discipline and Systematic Investing(Which is not equal to SIP) will make you reach your goals! Happy Investing.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 7000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 2,500 investors and advisors use this!
Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)