What millennials should learn from Gen X

Times have changed and as we sit at home surrounded by the turmoil of the corona virus pandemic, times are changing yet again. We are all going to come out of this having learnt a new thing or two. But it should not take a pandemic to engage and learn from our elders. If you are the kind of person who says, “I am a doer and will only learn from my mistakes and not from what the previous generation did”; well, my friend, feel free to find yourself in deep trouble soon. Life is not long enough to learn everything through making mistakes yourselves, sometimes you learn from the mistake of others as well. If you think that you are financially stable because of what you have inherited from your parents, even then you need to understand and learn how to manage and preserve that inheritance. For the rest of us, we have a long way to go.


According to the World Gold Council, Indian households are the world’s largest holders of gold, accumulating up to 25,000 tonnes. We consider gold as our best investment option and the primary objective behind that is that we can hold it in our hands and show it off to people. Older generation had less faith in the financial system which was underdeveloped back then and thus they bought gold with whatever savings they had. Our parents learnt it and are doing the same. But, for us, it is a different game altogether. Our financial system is more efficient now and it has become more viable to look for diverse investment options such as Bonds, Stock, Private investments, Mutual funds and various other options offered by the system which were not available earlier. We need to have a risk appetite to generate great wealth. There’s a saying that goes, ’Higher the risk, higher the EXPECTED return’.

Retirement plan

Earlier, Government sector employees did not think about saving for their retirement as they had their confidence in the government’s pension scheme. However, the Government has removed pension for employees since 2003-04 and new recruits are not eligible for pension. Coming to the private sector employees of yesteryears, they didn’t chart out a retirement plan and now are heavily dependent on their children or grandchildren. What you can do now is take a leaf out of the Gen X’s book and either depend on your future generation or plan for a better future by making and sticking to a retirement plan.

Single source of income

Gen X has always relied on a single source of income be it salary for the working class or profits for the businessman. Profits are fluctuating in nature and depend heavily on the prevalent business risks. What would have happened if a pandemic like COVID-19 affected the economy at that time? Do you think they could have simply relied on their pay checks to survive? GenX keeps telling us not to put all our eggs in one basket, but ironically in this case you only have one egg. You must create multiple sources of income, be it interest income, a side business, dividend income, rental income, royalty, franchising or whatever that you think may fit your idea of earnings. 


The only insurance that your grandfather has might be an auto insurance, and that too because it has been mandated by the government to have one. Insurance gives the holder of the policy the right to be protected against any kind of losses that they may face irrespective of the type of asset,. For instance, today you can insure anything starting from your mobile phone to your business. Insurance gives you a very good cushion and helps you to work without the fear of losing it all, until and unless you make some uninformed and unbalanced decisions. Medical insurance, is one such insurance that every individual should have irrespective of the generation or the age group they fall in. This will act like your support in case something unfortunate happens to you and medical attention is needed.


Is having your own house an investment?

If you have a house to your name and you live in it, that is good for your family but in financial terms, it cannot be considered an asset. Gen Z and millennials need to ensure that they understand what an asset is. If the house is not generating any revenue for you and is simply asking for repairs and maintenance, it is a liability. On the other hand, if you have a house and it gets you rental income, then you can consider it as your asset, even if you have a debt on that house because the rental income suffices the EMI. Our elder generation thinks that a house is an asset even if you keep paying for it your entire life. A survey conducted by Bank Bazaar indicated that buying a house is still the biggest aspiration for millennials. There is no denying that it saves you from the burden of paying monthly rent and you have a stable place to live, it still should not ideally be the first thing to invest into.

Building an emergency fund

Millennials prefer to live in the present. They are not much concerned about future contingencies and think that everything will remain the same. Gen X has always tried to keep funds for emergencies such as health issues, children’s education or any other unexpected expense that may arise. Millennials may be earning more than Gen X but if somebody asks them about their plans for future contingencies, majority will not have an answer to that. They must aim to have at least three months of living expenses saved. It may sound pretty daunting at first, to keep money aside for things that may never happen, but it is a step in the right direction.

Our elders may give us riches but the true wealth lies in their experience of life. Today you may be driving an expensive car because your father or grandfather could afford it. But ask yourself this ‘How could they afford such a lavish lifestyle?’ and then only will you learn and understand what must be taken care of in your future and future generations. Most people learn from their own mistakes but learning from the mistakes of others is a blessing in disguise.  

Team Investoday