When PM Narendra Modi unveiled his dreams about Atma nirbhar Bharat (Self-reliant India) on 12 May 2020, his intention would definitely be to make the country and its people self-reliant in all the socio-economic aspects. And, it is the financial independence that constitutes the base for all other independence. In all the developed countries of the Americas, Europe, and even Asia, adult students do some part-time work to meet their personal and educational expenses. Unfortunately, students remain dependent on their parents until they complete and find a suitable job. In a country, where around 4 crore students are financially dependent on others, self-reliance is a distant dream.
Significance of financial independence
Self-reliant India is impossible if youth, especially students above 18 years of age remain dependent on parents or banks, which is not a sign of a prosperous society. Besides, it is often observed that financially dependent youth easily fall prey to social insecurity and low self-esteem. Whenever they fail to meet any financial exigency they blame luck or follow an illegitimate path of earning money. On the other hand, students self-sufficient in bearing their expenses have a better confidence level and they successfully achieve their academic as well as personal goals.
During the inaugural address at the India Education Summit (IES) 2021, then Minister of Education, Ramesh PokhriyalNishank, said, “By connecting students with the internships, vocational training as a student reaches class 6, we will imbibe atmanirbharta (self-reliance) in a student. By the time these students will complete school education, they will be warriors who can take on any task.” However, this ambitious statement doesn’t clarify potential avenues of earning for students. Besides, the focus should be more on college and university students, school-going kids are already laden with academic pressure and board exams.
Stock market, a potential source of income
Through investment and trading in stock markets, students can enjoy financial freedom and curtail the burden on parents. Stock market can be a promising source of income for millions of students and unemployed youth in India. When the traditional job market is struggling to create new opportunities, stock markets are creating easy income avenues for a large section of society. Hence, students must understand that stock trading and investment are easy options to make money and share financial responsibilities with parents.
Power of Compounding
Experts often claim that if you want to see the magic of the eighth wonder of the world “The power of compounding” then you should start it as early as possible. They believe that the size of the investment is not the only factor in the creation of your wealth but the consistency and the time you give to your money pay off with surprise returns. That’s why investors create wealth in the longer term, not in a day or week.
The power of compounding can be better understood with the below example.
Jackson started investing at the age of 20 years and contributed just Rs 24000 per annum whereas Tyson started investing at the age of 40 and contributed five times the amount contributed by Jackson which is Rs 120000 per annum at the same rate of interest for their retirement goals at the age of 65 years. Now, who would you think has a better ROI?
Let us analyse:
| Jackson | Tyson | |
| Amount Invested | 24000*45 = 10,80,000 | 120000*25 = 30,00,000 |
| Time Frame | 45 Years | 25 Years |
| Rate | 8%(p.a.) | 8%(p.a.) |
| Amount Accumulated | ₹92,76,134.82 | ₹87,72,712.79 |
So, one can clearly see how the magic of compounding works. By investing just Rs 2000 per month with discipline can garner these results, then one should think of a situation where the investor does the same thing consistently in equities or ETFs.But, beware of blindfolding chess. Proper research should always be undertaken before investing in stocks, one should take care of the following things.
- Invest in Blue-Chip stocks, the reliable companies present in the stock market for a long time.
- Never invest in one single company or sector, and always diversify your portfolio with conservative as well as innovative sectors.
- Try to invest more funds in large-cap (50% of funds) and remaining in mid-cap (30%) and small-cap (20%) companies.
- Always have some buffer money ready with you to accumulate more equities in scenarios of corrections (crashes) of more than 25 %.
- Start learning Technical and Fundamental Analysis today to be an intelligent investor tomorrow.
The coda
Investment or trading in the stock market doesn’t require 8-10 hours of dedicated job. Investing 30 minutes to one hour daily in stocks, students can earn enough to meet their academic and other day-to-day expenses. This way, they can make themselves a responsible and self-dependent citizen of the self-reliant country.
