Gen Z Financial Planning: Anil Singhvi provides tips to invest in mutual fund SIPs, SGB, health and life insurance

On National Financial Awareness Day today, April 25, Zee Business managing editor Anil Singhvi suggests some finance tips for Gen Z. People who were born between 1997 and 2012 are called Generation Z (Gen Z). National Financial Awareness Day is observed on April 25 every year.

Singhvi suggests Gen Z invest in the stock market, insurance, mutual funds, and gold. For Gen Z people who have just started their job, Singhvi suggests saving 30 per cent of their gross salaries. This can include your deductions like Employees' Provident Fund (EPF). "Even if you are saving less than 30 per cent every month, just make sure you are maintaining the discipline and making it your habit," says Singhvi.

While providing investment tips, Singhvi said that investment returns should beat inflation. He says returns should be at least double the inflation rate.

Where to invest your money?

The safest investment plans are fixed deposits (FDs) and the PF because there are almost zero chances of losing money. But they can't beat inflation as they provide low returns.

According to Singhvi, the first category is equity—high-risk income; the second category is fixed income—FDs and PFs; and the third category is gold—medium-risk return. However, gold gives slightly more returns than debt.

People who don't want to take any risks should opt for fixed income plans. They should do fixed income investments through debt mutual funds, and if they want to invest in gold, don't buy gold in the form of jewellery; they should buy SGB (sovereign gold bonds), opines Singhvi.

Equity/stock investment: High risk, high returnsThis is the best investment plan, but it is also the riskiest because of its volatility. There is not much difference between stock and equity, but both give better returns in the long term. It is always better to invest early and for the long term in equities, said Singhvi. The minimum period for equity is 3-5 years.

How to invest in equity?

As it is difficult for Gen Z to do research, they should do a SIP (systematic investment plan) in equity mutual funds. It is always better to invest in an index fund rather than choose stocks on your own, says Singhvi.

If anyone wants to invest in stocks, they can start with blue-chip companies or large-cap companies. Gen Z can also start investing through an initial public offering (IPO). That's how you can have the experience of investing in companies.

Investment in mutual funds

To invest in equity funds, one should first see the risk, return, and time. If you are investing money for 7–10 years, then invest in small-cap funds.If you have less time and want to take less risk, you should invest in mid-cap funds for 5-7 years, according to Singhvi. For large caps, you should invest for 3–5 years, he says.Diversified, flexicap, dynamic asset allocation funds, and multicap funds can also be good options for Gen Z, added Singhvi.

Singhvi also suggested investing only that much money in trading that you can afford to lose as it looks easy to do trading but it is not. This is the easiest and shortest way to earn money through the most difficult method of trading.

What does Sighvi say about cryptocurrency?

According to Singvi, crypto is the riskiest way of investing. There is too much volatility, and it has yet to be established as an asset class.On average, people of 22 years of age are investing in crypto in India, and 62 per cent of people invest from Tier 3 and Tier 4 cities between Rs 10K and Rs 12K.

Should Gen Z buy insurance plans?

"One should surely buy insurance; this should be your first investment," said Singhvi.

According to him, one should buy both health and life insurance. For life insurance, term insurance is the best plan, or you can buy ELSS, according to Singhvi. He also suggests buying health insurance for critical illness and accident coverage.