How To Convince Your Parent to Invest?
In an era of rising inflation, traditional investment schemes like FDs, Sovereign gold bonds, and savings bank accounts are not providing the returns you need to beat the inflation rate. You might invest in investment options and understand the importance of investing in such options, and you want your parents to reap the benefits as well.
The problem is how to convince your parents to invest in the stock market, mutual funds, ETFs, or any other investment avenue in which they could get a decent amount of returns.
Investing is a tool for protecting your money from inflation and an essential piece of equipment to create wealth and passive income. When you invest in stocks and debt, you will get dividends and interests, respectively, which can act as a passive income. At the same time, your invested money will also get the benefit of capital appreciation, especially in the case of stocks.
Now, you have to convince your parents to make a shift from the conventional way of investing to the modern approach of investing.
Let's have a look at some tips that can help:
Trustworthiness of the investment avenue you choose
It is quite obvious and simple that investors need trust before they invest. First of all, you need to assure yourselves that a particular investment avenue is fundamentally sustainable enough to invest in, then only you will be able to convince your parents to start investing in the markets. You need to establish the trustworthiness of the financial instrument in front of your parents before going forward with the actual investment.
Give them historical data as evidence
Parents love numbers. From childhood, when you used to convince your parents to buy you a bicycle if you got good grades, to adulthood when you are convincing them to start an investment, one thing has never changed, i.e., numbers. When you show that you are good with the numbers and investment also has a decent growing number of sustaining their money, they will get convinced to start their investment journey.
Make a comparison
Who doesn't love before vs after transition? If you show your parents a comparison between the returns they will get in the case of their way of investing and returns in the case of your way of investing. If your parents can see high returns with minimal risk, they might surely invest in the said financial instrument.
Count the benefits
There are countless benefits of investing in a diversified portfolio. For instance, if you want your parents to invest in the stock market, you can let them know the advantages of capital appreciation, liquidity, ownerships, voting rights, interim and final dividends, bonus and right shares, etc. If you are looking forward to investing in a debt instrument, you can show the benefits of tax they will get in the case of interest received and indexation benefits when it comes to maturity.
Show rather than tell
We, as human brains, love proves when it comes to our money. When you tell your parents how good a financial instrument is to invest in, they will just hear it. But, when you show them the numbers like, "XYZ mutual funds have given 15% yearly returns", they will trust you. They will not trust the historical data from an authentic and responsible enterprise.
Educate your parents before bombarding your pitch
If we don't understand something from its core, it is a human tendency that we don't trust it. You will not ever be able to convince your parents to invest if you don't educate them about the related aspects unless they belong to a financial background. Otherwise, it would help if you made them understand the importance of compounding effects, taxation benefits, passive income opportunities through investing in a diversified portfolio, capital appreciation, and, most importantly, the adverse effects of inflation on your hard-earned money.
Ultimately, the decision to invest isn't just your decision to make. Although it might be challenging to get your parents on board at first, they will likely follow your lead once they realize how much money they can save in the long run. Therefore, you should try to convince them of the advantages of long-term investing.
This blog is purely for educational purposes and not to be treated as personal advice. Mutual funds are subject to market risks, read all scheme-related documents carefully.