Every day, we are bombarded with new ways to invest and make money. From social media influencers promoting the latest financial trends to people suggesting high-risk opportunities, it can feel overwhelming to decide where to put our hard-earned money. Generation Z, in particular, has a different understanding of investing—often favouring fast, high-reward opportunities over slow and steady wealth accumulation. However, history has shown that traditional investment strategies, built on long-term principles, remain unmatched when it comes to financial security and growth. Here’s why sticking to tried-and-tested investment methods is still the best way forward and how to invest wisely for the future.
1. Why Quick Money Trends Are Not Sustainable
Many young investors are drawn to cryptocurrency, option trading, day trading and investing in high beta stocks with poor financials and meme stocks due to their promise of quick returns. While a few may see short-term success, the majority face steep losses due to the extreme volatility and unpredictability of these investments. Unlike these speculative trends, traditional investing minimizes risk and steadily builds wealth over time.
Take, for instance, the Bitcoin boom and bust. Many young investors poured their savings into Bitcoin at its peak, believing they had found a shortcut to wealth. But when the market crashed, some lost nearly 70% of their investments overnight. Similarly, the Indian stock market has seen its share of crashes, like the COVID-19 dip in 2020, where the Sensex plunged by almost 40% in weeks. Investors who had diversified their portfolios, instead of betting everything on one asset class, managed to recover their losses over time and profited as markets rebounded.
2. The Ill Effects of Futures and Options Trading
Futures and options (F&O) trading is another area where many young investors get lured in by the illusion of quick money. While these derivative instruments can be useful for hedging risks, they are highly complex and speculative. Many inexperienced traders enter the F&O market without fully understanding its risks, often leading to devastating financial losses.
Rahul, an enthusiastic trader, followed a Finfluencer’s advice and began trading options, convinced he could double his money in no time. His initial wins gave him confidence, but when the market took an unexpected turn, he lost everything, plunging him into debt. Such cases are increasingly common, as young investors underestimate the high leverage and risks involved in F&O trading.
A recent Securities and Exchange Board of India (SEBI) study reveals that a staggering 93% of individual traders incurred losses in the equity futures and options (F&O) segment between FY22 and FY24, with aggregate losses exceeding ₹1.8 lakh crore.
3. Traditional Investing Has No Substitute
There is no substitute for disciplined, long-term investing. The stock market, real estate, bonds, and mutual funds have stood the test of time and consistently provided returns for those who stay patient. Unlike speculative trends, these investments are backed by strong fundamentals, making them reliable options for wealth creation.
4. The Role of Financial Education
With Gen Z turning to TikTok and social media for financial advice, traditional investment wisdom is often ignored. The generation’s trust in online sources sometimes outweighs their trust in experienced financial advisors. However, the key to successful investing is understanding economic principles, different asset classes, risk management, controlling emotions and the importance of diversification—something that quick-money schemes fail to offer.
Atul, a young investor, fell into the meme stock craze after seeing Finfluencers hype a certain stock. He put in a significant amount, only to watch it crash after an initial surge. Unbeknownst to him, the influencers had cashed out, leaving retail investors like him at a loss. Such stories highlight the dangers of blindly following trends without proper financial knowledge.
5. How to Invest Wisely for Wealth Creation
Instead of chasing overnight success, here’s a structured approach to investing that ensures long-term financial stability:
1. Start Early and Stay Consistent
Investing even small amounts regularly can yield significant returns due to compounding. The earlier you start, the more time your money has to grow. For instance, a monthly SIP of Rs 5000/- will create a corpus of Rs 1.52 crores over a period of 30 years at 12% annualised returns
2. Diversify Your Portfolio
Spread your investments across different asset classes, equity preferably through mutual funds, bonds, gold & silver to minimize risk and maximize returns over time.
3. Focus on Long-Term Growth
Avoid short-term speculation and invest with a time horizon of 10, 20, or even 30 years. Historically, long-term investors have always outperformed those who attempt to time the market. Spending time in the market is more important than trying to time the markets. They say, 90% of the gains in the market have come in only 10% of the time. If we are not invested during those 10% of the time, it’s not worth investing in the stock market
4. Keep Emotions Out of Investing
Avoid panic selling or making impulsive investments based on social media trends and market behaviour. Instead, stick to a well-researched financial plan. You can read more about controlling emotions while making investments here How Emotions Shape Our Investment Decisions
Conclusion: The Smarter Path to Wealth
While Gen Z is exposed to countless new ways to make money, the reality is that traditional investing has no substitute. Patience, discipline, and knowledge remain the pillars of successful wealth creation. By following time-tested investment strategies, diversifying portfolios, and resisting the temptation of high-risk trends, individuals can secure their financial future without unnecessary stress or uncertainty.
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