Manish Goel, Founder and Managing Director of Equentis Wealth Advisory Services, shares valuable insights on the importance of early equity investing for teenagers and young adults. A seasoned financial expert committed to democratizing wealth creation in India, Goel has been instrumental in bridging the gap in financial literacy. This interview explores how early exposure to investing can help young individuals build financial discipline and achieve long-term success in today’s evolving investment landscape.
What are the primary benefits of starting equity investing at a young age, and how does early exposure influence long-term financial success?
Starting equity investment early is comparable to planting a tree – it requires patience and nurturing but yields exponential returns over time. The power of compounding becomes evident through real examples: investing ₹60,000 annually with a 10 per cent return from age 10 could accumulate to approximately ₹2.5 crores by age 50.
However, the same investment starting at age 15 would yield only ₹1.6 crores, further dropping to ₹1 crore if begun at age 20, and merely ₹59 lakhs if delayed until age 25. This dramatic difference illustrates why early investment, combined with wise choices in solid, reliable assets, is crucial for maximizing long-term financial growth. It’s not just about starting early; it’s about giving your investments the time to mature and compound, much like a tree that eventually provides thousands of fruits from a single seed.
At what age do you think it’s appropriate to introduce teenagers to the stock market, and what concepts should parents start with?
Investment education should be viewed as a continuous journey rather than a curriculum with a fixed starting age. Just as we don’t wait for a specific age to teach children about respecting elders or eating healthy, financial literacy should be naturally integrated into their upbringing from an early age. It’s about developing a mindset and lifestyle that understands the value of money and smart financial decisions.
This approach helps children grow into financially aware individuals who understand basic economic concepts before they even encounter actual stock market investments. The focus should be on building a foundation of good financial habits that will serve them throughout their lives, rather than rushing them into understanding complex market mechanisms.
What practical steps can parents take to guide their teens into making their first investments while keeping risk at a manageable level?
The journey to investment education should begin with basic saving habits. Start by introducing a piggy bank system where children learn the fundamental concept of saving. Make it engaging by matching their savings, teaching them that money can grow when managed well. As they approach age 10, the next step is opening a bank account under parental guidance, allowing them to experience real banking operations and understand how interest works.
When they reach their teenage years, make investing relatable by connecting it to their daily lives – for instance, if they like certain brands or products, explain how they could own a part of these companies through stocks. This gradual progression from saving to understanding basic investment concepts helps build a strong foundation while keeping risks manageable through proper guidance and education.
What kind of mindset should teens develop early on to navigate the volatility of the stock market effectively?
The essential mindset for young investors centers on understanding that money management principles remain constant regardless of age – whether you’re 15 or 50. They need to develop patience, discipline, and a long-term perspective while accepting that market performance varies significantly year by year. Some years might bring returns as high as 50 per cent or more, while others might show no growth or even losses.
This understanding helps build resilience against market volatility. The key is to maintain consistency in approach and clarity in investment goals, allowing the power of compounding to work its magic over time. Young investors must learn to view market corrections not as setbacks but as potential opportunities, developing the emotional maturity to stick to their investment plans despite market fluctuations.
Are there specific tools or resources you recommend to help young investors understand market basics and manage their portfolios responsibly?
In today’s digital age, while information is abundant, it’s crucial to be selective about learning sources. Social media platforms and ‘finfluencers’ often oversimplify complex financial concepts or spread misinformation. Instead, focus should be on structured learning programs that provide comprehensive, unbiased financial education.
This is particularly relevant given the dramatic increase in market participation – from 2.74 crore registered investors on the National Stock Exchange before COVID to over 10.37 crore currently, with 40 per cent being under 30 years old.
Platforms like Informed InvestoRR offer systematic financial education designed to help investors understand market basics and develop responsible investment habits. The focus should be on learning fundamentals rather than seeking quick-fix solutions or following trending investment advice.
Could you share common challenges or misconceptions young investors face when they start, and how can they avoid these pitfalls?
The modern investment landscape presents several significant challenges for young investors, particularly in the age of instant gratification and social media. One of the primary hurdles is the temptation to act on impulse, driven by smartphones and trading apps that constantly push notifications encouraging frequent trading.
This generation’s familiarity with instant results can make it particularly difficult to resist the urge to constantly buy and sell. Another major misconception stems from impatience – when you’re accustomed to quick delivery and instant content, the concept of waiting years for investment returns can feel foreign and frustrating.
The challenge of peer pressure also plays a significant role, especially when friends might be following trending investment advice from social media influencers rather than pursuing sound investment education.
Additionally, many new investors fall into the trap of focusing solely on price movements, believing that lower-priced stocks are automatically better investments or that short-term price increases indicate a good investment opportunity.
Published on November 20, 2024
