FINANCIAL FREEDOM IN YOUR 20S: 5 INVESTMENT RULES FOR GEN Z INVESTORS

Financial Freedom in your 20s: Generation Z is also entering the world of investments early due to the easy access to financial information through digital media. Though it is true that younger investors have an advantage over their older counterparts in terms of the time factor and ability to take risks, it is also advised that they do not chase quick gains without having a financial plan.

In a conversation on Zee Business, Wiseinvest CEO Hemant Rustagi and mutual fund expert Vishwajeet Parashar explained how investors in their 20s can use time and compounding to build long-term wealth while avoiding common mistakes.

Here are five investment rules for Gen Z investors looking to work towards financial freedom:

1) Start early and make time your biggest advantage

For investors in their 20s, time can be one of the biggest assets. Parashar said that “time in the market” is more important than trying to “time the market”, as staying invested for longer allows the power of compounding to work.

He illustrated the benefit with an example: a Rs 5,000 monthly SIP started at age 20 and continued for 30 years could potentially grow to around Rs 1.76 crore, assuming a 12 per cent annual return. With a 10 per cent annual step-up in the SIP, the corpus could rise to around Rs 4.41 crore.

These figures are illustrations based on assumed returns, not guaranteed outcomes. The key takeaway, according to the expert, is to start early and increase investments as income rises.

2) Build a core portfolio before chasing high-risk bets

Gen Z investors are increasingly exposed to cryptocurrencies, futures and options and other high-risk investments through social media. Parashar cautioned that the desire to make money quickly can lead to poor investment decisions.

“My first suggestion would therefore be to create a core portfolio through mutual funds,” he said.

According to Parashar, this core portfolio can include diversified equity mutual funds, flexi-cap funds or multi-asset funds. Investors with a higher risk appetite can allocate a smaller portion of their money to high-risk investments, but only after understanding the risks involved.

Rustagi also stressed that young investors should first understand the asset class before making investment decisions instead of simply following market trends or social-media tips.

3) Don't confuse aggression with a shortcut to wealth

Young investors may have a longer investment horizon and therefore greater capacity to take equity risk. However, Rustagi warned that being aggressive does not guarantee higher returns.

“Rushing or taking excessive risk does not guarantee better returns,” Rustagi said, stressing the importance of creating a roadmap and investing according to it.

He added that investing is a process that requires “patience and perseverance”. Market volatility and early mistakes can provide valuable lessons, but investors do not necessarily need to lose money to learn them.

For Gen Z, the focus should therefore be on understanding risk, maintaining discipline and allowing investments sufficient time to grow rather than chasing the fastest possible return.

Also Read: Want financial freedom in 15-20 years? 6 investing habits to build long-term wealth

4) Get the financial foundation right: Budget, emergency fund and insurance

Investing is only one part of financial planning. Rustagi said Gen Z needs to pay greater attention to budgeting, particularly to understand how much it needs to save and invest for future goals.

Parashar recommended maintaining an emergency fund covering six months of expenses so that an unexpected financial requirement does not force an investor to take on additional debt or disrupt the investment plan.

He also suggested that young investors should take their own term and health insurance instead of relying solely on their parents’ health coverage.

A good financial base enables investors to continue with their investment plan despite any additional expense.

5) Practice discipline and avoid social-media-driven investing

Gen Z has unprecedented access to investment information through apps and social media. But greater access does not necessarily mean better investment decisions.

Parashar cautioned investors against putting money into products simply because they are being promoted by influencers or are currently trending.

Rustagi similarly advised young investors to avoid making “haphazard” decisions or investing in the “flavour of the month”.

As conveyed by the experts, it is necessary to carry out research prior to making investments and be patient and disciplined in achieving long-term objectives.

For Generation Z, financial independence will not necessarily entail looking for a major investment opportunity. Rather, it could be achieved through early, regular investments and building SIPs through earned income.

2026-08-13T10:44:23Z