Outdated financial advice that parents should refrain from giving

08 Jun 2019

Most teenagers are induced by their parents to indulge in a certain investment or other kinds of financial matters. Well, sometimes this may be helpful as teenagers normally are not well-versed with the world of finance. But sometimes, things go wrong too.

Sometimes parents fail to understand the world of finance in a better way and this affects their judgment of a certain fund or step. Today, most parents are more than eager to initiate their millennial children into investing. In their eagerness, they advise their children with the initial steps. But sadly, these initial steps often cripple or constrain a millennial investor's financial journey.

Being in the advising field for a long time, we have seen a lot of such cases where parents have given advice that is not only outdated but simply wrong keeping the modern scenario in mind. It's very hard to tell an earnest parent that they are wrong. But it is needed, as a financial investment is something that we ought to be extremely careful about

Some outdated financial advices that most parents give to their children

A lot of parents, despite their noble intentions, end up giving the wrong finance-related advices to their children. Why is the case so? Well, there are 2 main reasons behind this. Firstly, the millennials lead a very contrasting working and personal life from them. Their financial needs are thus different from their parents.

Secondly, the range of financial products, as well as options present today, are totally different from what their parents had during the start of their career. So, it is quite hard for parents to give the most appropriate kind of advice to their children. 

  • Purchase an insurance policy first - In India, no investment journey begins without an insurance policy, generally a pension policy. A pension policy can provide people with a gratifying Rs 8000 every month after a period of 25 years. Now, the most important question that arises here is, what will a modern day child do with just this kind of monthly amount after 25 years, even under a low inflation case? Although the returns from this kind of investment are good, it's still not heavy as compared to other kinds of investments like mutual funds and others. So, asking them to spend their early earnings in such savings scheme is not fruitful at all. It can be helpful when used just as a pension plan after retirement and thus, categorized in retirement planning. Wealthclock Advisors provide you the best kind of guidance relevant as per the current times. Our expert advice is based upon proper evaluation of the financial market, one's financial strength and a couple of other factors.
  • A relationship with a bank - If parents approve any kind of relationship of their millennial children, then it must be with a bank. When you visit a bank, the officials suggest you several products and our parents ask us or rather try to convince or induce us to put our time and money on them. But for what exactly? Unlike previous times, a millennial does not visit the bank quite often. There will be no case of requesting for cheque clearance or depending on the manager for a higher education loan. Basically, a millennial does not need to listen blindly to a bank manager's advice. Listening to a bank manager blindly can tie oneself to products that would incur high costs upon early exits, or those that have high risks involved. What mostly happens is a young earner is forced or convinced to lock most of their investment into products that are of little relevance to their financial goals.  But why? Why can't parent's let their young children explore their journey and find what suits them? There are enough options at the moment. If one feels mutual funds are suitable for their financial goals, they can get the most helpful mutual fund investing advice from us.
  • Buy a house urgently - We have noticed a lot of parents say that real estate prices rise with time and so, they asked their children to not delay and purchase a house right away. The logic behind this being, the child has no other commitments and thereby, can well pay their EMIs and finish them early. But this plan is quite absurd and let's tell you how. Firstly, most parents leave their house to their children and so, they are not going to be homeless later. Secondly, with time and growth in career, they may decide to settle elsewhere, in another state or maybe the country. Thirdly, if children start paying for EMI now, they will have a little surplus by way of savings for the next 10-20 years. Without sufficient savings, how can they fulfill their other important life goals and aims? Purchasing a house before settling into a career is a terribly wrong decision! Instead, you can invest in mutual funds online and grow your wealth with time. This will make you financially independent.

 

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