6 sure-fire ways for Gen Z to earn their first million

Vijay Valecha, Gulf News, July 10, 2024

In an age of global economic uncertainty, it is crucial for Generation Z (Gen Z) to embrace a proactive financial management approach to make the most of their spare cash each month. Here’s a comprehensive look at how you can navigate your financial landscape effectively

1. Invest, invest, invest, and then invest some more

When you invest, you offer yourself a pathway to long-term wealth accumulation. Apps like Robinhood and Acorns provide accessible platforms to start investing with minimal initial capital. Fractional shares enable investments in high-value stocks like Apple or Google without needing to buy full shares, making it easier for young adults to diversify their portfolios. Sara Avera, cofounder of GCME, said that Gen Z should consistently put an amount on the side every month to make investments. “For example, let’s say that your monthly salary is Dh10,000 and you will invest 5 to 10 per cent of your monthly income every single month, which will be Dh500 – Dh1,000. If you keep your spare cash saved in the bank, the only person you’ll be helping is the bank. Why, you might ask? Because the bank will take your money and invest it, then give you back only a small percentage. Money depreciates in value over time, and you have to find ways to beat inflation.”

Renoy Kundukulam, CEO of a wealth management company, Finmark Capital says that every 25-year-old now can follow a simple rough guide to become a millionaire by the time they reach 40 years old.He talked to Gulf News about a method turning Gen Z now from financial uncertainty to stability. “One effective method is adopting a structured financial regimen, such as the 40:30:30 method:allocating 40 per cent of income for daily expenses, dedicating 30 per cent towards Equated MonthlyInstallments (EMI), and saving the remaining 30 per cent to build assets.”

2. Keep yourself safe with savings

Establishing a savings habit is crucial for financial stability. Traditional savings accounts at online bankssuch as Ally or Marcus by Goldman Sachs offer higher interest rates than traditional banks, ensuringthat savings grow over time. Automatic transfers from checking to savings accounts can streamlinethis process, fostering financial discipline.

Vijay Valecha, Chief Investment Officer, of global financial markets company Century Financial, said,“Time deposits, such as fixed deposits or recurring deposits offer a safe investment option withguaranteed returns, albeit typically lower than riskier investments.”

“Wio for instance offers 5.5 per cent per annum on dirham savings in Fixed Saving Spaces, and 4.25 percent per annum on US dollar savings in Saving Spaces. Liv, on the other hand, often accredited as thebest digital bank among Gen Zs, can help you open a bank account within minutes, and helps theaccount holder earn up to 2 per cent per annum on the funds in the Liv Goal Account.”

3. Go for high-yield savings options

If you are seeking higher returns while maintaining liquidity, high-yield savings accounts are anattractive choice. Platforms like Discover Bank and Chime offer competitive interest rates, allowing GenZ to grow their savings more effectively than with traditional accounts.

Valecha said not everyone is willing to delve deep into the investment world. “For those who are notquite ready to dive into the stock market or other investment vehicles, starting with a high-yieldsavings account is a solid choice. These accounts typically offer higher interest rates than standardsavings accounts, allowing your money to grow faster as you build an emergency fund.”

4. Look into buying and selling digital currencies

Platforms like Coinbase and Binance offer user-friendly interfaces for buying and trading digitalcurrencies such as Bitcoin and Ethereum. While volatile, cryptocurrencies present an opportunity forsignificant returns for those willing to take calculated risks.

5. Invest in yourself: Education and Skills

Investing in education and skill development can yield lifelong dividends. Online courses andcertifications through platforms like Coursera and LinkedIn Learning enhance career prospects andearning potential.

6. Make socially responsible investments

Gen Z values social impact alongside financial returns. Investing in companies that prioritiseenvironmental, social, and governance (ESG) factors through platforms like Swell or Impact InvestingNetwork can align financial goals with personal values

Source

Gulf News