What does “Wealth” mean to the Indian Millennials?
India is expected to become the youngest country by 2022
Millennials (a generation born between 1980 and 2000) are fast entering their prime spending years. Growing up in an age of rapid change, they have a set of expectations and priorities that are radically different from those of the older generations.
What the millennial Indian wants?
Not cars & houses, just fun & convenience.
Major emerging trends amongst Millennial
1. Why do millennial do not want to buy a “Home” or not in hurry to buy?
The buying trend is quickly shifting from ownership to access. We are fast moving towards a ‘sharing economy’.
Millennial don’t want a huge EMI burden early on in their careers. They do not want something that will take away 25-30 % of their salaries or Income. They do not want to be tied down to a mortgage, as it adds risks to their lives and their mobility. In the ever-changing corporate landscape, millennial also don't want to be tied down to a house for the rest of their lives. They want to have the flexibility of moving jobs or countries. For older Generation, owning a home was typically seen as a status symbol, a financial security and a necessity. Not only was owning a home considered to be a major milestone in life but renting a home is considered as disparaging. On the contrary, Indian millennial do not consider buying a home as a sense of accomplishment. They would rather travel to 50 countries before they turn 30, have 3 jobs or own their business rather than buy a home. This has led to a paradigm shift in the Indian real estate industry. Millennial are content sharing their apartments with more people if it helps them save on real estate costs, or fund their next trip, next car, next outing or the next iPhone. It is important to note and understand the underlying drivers of millennial behaviour and why they are no longer interested in buying real estate as compared to the previous generations.
Renting is cheaper than buying
According to research, rent payment works out to around 3% of cost of house where as EMI outgo will be much higher. Millennial are willing to rent a property or share their parent’s home for a longer time, and instead save for travel and leisure.
Owning a home is not only a liability that slowly turns into an asset but also a form of consumption. You have to pay property taxes, maintenance and upkeep are required. Designs can go out of style which could require renovations over time. There are also transaction costs (Steep Stamp Duty of 6-7% and Brokerage of 1-2%) involved with the purchase and sale of a home, along with the interest being paid on the loan. When you take all of the costs into consideration the investment outlook on a home may not be as great as many have led you to believe. Then there’s the fact that you can’t spend your house as it’s an illiquid asset.”
2. Buying a car is being pushed lower on the priority list of the average millennial. 25 years from now, car sharing will be the norm, and car ownership an anomaly. Car aggregators like Uber and Ola are offering almost the convenience of owning a car, without having to buy it.
3. Even workplaces are evolving into a shared ecosystem with co-working spaces becoming popular among youth-led startups.
4. Another ground-breaking phenomenon has been digitization. This generation has the world at its fingertips. Millennial are natives to technology and are habituated to instant gratification. Having instant access to product reviews, price comparisons and extraordinary variety shapes their buying decisions. Millennial will soon depend on mobile apps to eat, shop, book tickets and conduct banking activities.
5. A noticeable trend has been the growing conscientiousness in two aspects, well-being and social good. As a result, millennial are becoming increasingly health-conscious and willing to pay a premium for good health. Indian millennial have a fitness app installed on their phones and think leading a healthy life is a priority. Majority disapprove of smoking and drinking.
6. Millennial are also more environmentally and socially aware and conscious than earlier generations.
7. Emotional well-being: Indian millennial seem to be convinced that they will be happier than their parents as opposed to their counterparts in Europe and Japan. This is a clear indication of the general optimism about the economic scenario in India.
What does “Wealth Planning mean to Indian Millennial?
Do they need Financial Planning, Retirement Planning & Succession Planning?
Once they grow in years and have family and child/children, all reasons, rationale for Planning such as Wealth & Estate applies to them. They would also start thinking about everything that their parents told them or done for them.
For them also, Wealth refers to the state of being rich or having an abundance of material assets and money.
Wealth is when a person acquires lots of money, they have a high income or perhaps some other thing that has lead them to acquire lots of cash.
For Indian Millennial, prosperity is an abundance of material possessions, money as well as other factors like health and happiness. It can be equivalent to having a good fortune. A prosperous person not only has a lot of money, and property, but he also has a lot of friends, family and stays healthy.
Prosperity is the state of being prosperous or successful. Prosperity is the success and flourishing of any human. And for this they have to go through the process of Financial Planning, Asset Allocation, Retirement Planning (they would also grow and want to even retire earlier than their father) & Succession Planning as they would want to do everything for their children.