The Unspoken Truth About Youth Savings in Bangladesh

Strategic Insights -

Youth unemployment stands at 10.6 per cent, higher than national averages due to limited job opportunities in Dhaka, where living costs devour income before meaningful savings can accumulate. A strategic dispersal of industries outside of Dhaka could rectify this issue, enabling young professionals to optimize for savings rather than sacrificing their financial futures. Meanwhile, the conversation about income diversification remains almost nonexistent, despite its importance in learning from multiple income streams.

Key Takeaways:

  • Nearly 28 per cent of Bangladesh's population falls between the ages of 15 and 29, yet conversations about youth-specific savings behavior remain frustratingly absent.
  • The average youth in Bangladesh barely saves due to the lack of priority placed on this question, resulting in minimal lifetime earnings of Tk 1.8 million over five years, with nothing remaining after expenses.
  • Employment concentrates in Dhaka, where living costs consume income before meaningful savings can be accumulated, resulting in limited savings potential for individuals in the capital.
  • Young professionals can optimize for savings by working in regions outside of Dhaka, such as Chattogram or Rajshahi, where rent is significantly lower, resulting in higher savings potential.
  • The country needs systematic deindustrialization of Dhaka for the concentration of opportunities to exist beyond the capital, enabling young professionals to spread their income across different geographic locations.
  • Income diversification is crucial as it provides a safety net and shock absorption, ensuring that even a reduction in primary income can be compensated for by secondary income streams.
  • Strategic allocation of savings involves investing 30 per cent in low-risk vehicles like treasury bonds and savings certificates, and 70 per cent in more aggressive investments such as prize bonds and Biniyog.io.
  • Emerging platforms like Biniyog.io and iFarmer enable individuals to invest in small businesses and earn returns ranging from 12 to 20 per cent, while respects the Islamic principle of Halal investments.
  • Implementing genuine market reforms and punishing manipulation severely is essential for creating a stable stock market where retail investors can invest without losing their capital.
  • The geographic advantage of industrial dispersal outside of Dhaka enables young professionals to earn a significantly higher amount of money, resulting in substantial compound growth over time.
  • Investing Tk 8,000 each month at a 14 per cent annual return can grow to approximately Tk 8.74 million over 20 years, highlighting the impressive effect of compound growth on long-term investment decisions.
  • The power of compound growth creates financial independence, enabling individuals to redirect portions of their income towards tomorrow, rather than spending everything.

Statistics:

  • Youth unemployment rate stands at 10.6 per cent in Bangladesh, higher than national averages.
  • Average youth in Bangladesh saves minimally due to the lack of priority placed on this question.
  • Average lifetime earnings of a youth in Bangladesh stands at Tk 1.8 million over five years, with nothing remaining after expenses.
  • Savings potential for individuals in Dhaka is limited due to high living costs, resulting in savings of only Tk 600,000 over ten years.
  • Investing Tk 8,000 each month at a 14 per cent annual return can grow to approximately Tk 8.74 million over 20 years.
  • The true magic of compound growth reveals itself over time, demonstrating the astonishing potential for wealth creation through long-term investing.

Sources:

  • The articles highlights the youth unemployment rate in Bangladesh and the limited savings potential of individuals in the capital.
  • It emphasizes the importance of income diversification, remote work, and long-term investing in creating financial freedom for young professionals.
  • It references Biniyog.io, a Shariah-compliant platform that enables individuals to invest in small businesses, generating returns ranging from 12 to 20 per cent.
  • It cites the importance of genuine market reforms and punishing manipulation severely to create a stable stock market for retail investors.