Why Parents Resists for Stock Markets

These are initial thoughts on the topic, I will keep updating the same, feel free to share your feedback in the comments section below.

The number 1 reason is their own experience, it was either a first-hand or passive experience.

Either they have lost some money in stock markets or they have seen someone losing a fortune in stock markets.

Also, we should not forget they have also seen Banks giving fixed rates of interest above 8% or even 10%.

The second reason which is because of experience itself is lack of interest and thereby lack of knowledge of how things work in stock markets.

The idea of personal finance was not well-pitched into their ears when they were young and just started earning. Most of them start thinking about money once they were married or they had kids.

The next reason is the experience of their parents (your grandparents). Your parents were more obedient than you (in most cases).

Emotional pressures to get married early, to get a house as soon as possible, to invest in gold as an asset class, to have kids as soon as after marriage, and whatnot.

The above reasons collectively left very little to save.

If you will check at your place you will find

1. Fixed Deposits

2. Recurring Deposits

3. Gold.

4. Insurance as an investment.

These are considered safe. Our parents are looking for the safety of their capital. At the same time, they go for advance loans in the open market at 2% per month, or they will participate in unorganized “CHIT FUNDS” popularly known as “committee” in North India.

The concept they completely ignore while taking money decisions

1. Investing in equity is investing in a business.

2. Time-value of money.

3. Power of compounding.

4. The “house” is not an investment.

5. Risk of taking huge loans for housing and the effect of EMI on their daily life.

6. One day they will stop working for sure and then they will need money to live the life for which they were saving.

We can change their mindset gradually by talking to them and discussing the basic concepts with them. Please note that it took them years to build this mindset, changing it will take time and effort.

All the best. God bless you

Neeraj Arora

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