Good Investment Options for Youngsters
When you step out of college and into your work-life, salary management must be one important factor that must be there in every youngster’s mind. While wasting away your money every month is the easy way out, it can have severe repercussions in the future, especially when you will have to start taking care of your parents or when you get married and want to start a family. Saving from a young age can help you better manage your finances in the future. Which are the best investment options for youngsters in India?
10 Good Investment Options for Youngsters in India
Here are 10 good investment options for youngsters in India.
1) Bank fixed deposit
One of the most popular and the safest investment options available in the market bank fixed deposits are the easiest investment options for youngsters. In a fixed deposit, you deposit your money for a higher interest rate than a typical savings account. There are fixed deposits that offer premature withdrawals and in case you cannot. In cases where you cannot do premature withdrawals, only after this maturity period can you withdraw the amount. FDs are available for 1 week to 10 years tenure.
You can either invest in a cumulative deposit where the interest is reinvested into the principal amount or the non-cumulative deposit where the interest is paid to the investor.
2) Mutual Funds
Albeit being a risky investment option, Mutual Funds is one of the options that can provide a higher return on investment.
In Mutual Funds, a fund manager allocates the funds collected from different sources into different classes such as equity, debt, liquid funds, etc. Depending on the market performance of these assets, you will be able to generate returns. There are low risk mutual funds and high risk mutual funds. One can pick-up based on their risk appetite and tenure of investment.
3) Health insurance
You would have confused about health insurance being called as an investment. Don’t take me wrong. Health insurance is another great investment option both financially as well as physically. With the coronavirus pandemic raging across the world, getting a coronavirus health insurance would be a recommended option now.
A health insurance will help you cover for medical expenses without which the skyrocketing medical bills could create a dent in your savings.
Depending on the type of policy that you are opting for, you can insure your spouse, children and parents. It will create an all-round protection for your family and will give you peace of mind. Premium paid against health insurance is also exempted from tax.
4) Public Provident Fund
PPF is a risk-free investment plan that is backed by the Indian Government. The current rate on PPF is 7.9% and is revised by the Government every quarter.
The principal amount, interest earned, and maturity amount are exempted from tax. The lock-in period is 15 years. Any contribution of up to Rs 1.5 lakh per annum is exempted from income tax u/s 80c..
5) Recurring Deposits
In Recurring Deposits, investors can make regular deposits on periodical basis. Here you can choose the tenure for which the deposits can be made as opposed to the Fixed Deposit scheme. The tenure period, usually ranges from 1-10 years.
You can open the RD account within your own bank and deposit a certain amount into this account every month. You will get the interest amount along with the principal amount post the maturity period.
6) National Pension System
While pension can seem so far away, planning beforehand will ensure a stress-free post-retirement period. National Pension Scheme (NPS) is also a Government-backed scheme wherein you can invest in equities and debt, and the final pension will depend on the returns from these investments. It is open to anyone between the age of 18-60.
You can even withdraw 25% of the pension amount within 3 years of opening the account. It is also subjected to additional tax benefits up to Rs.50,000 under Section 80CCD(1B).
7) Post Office Monthly Income Scheme (POMIS)
This is a savings scheme which is Government-backed and allows investors to to get regular monthly income. The lock-in period is 5 years. You can open a POMIS scheme with a starting amount of Rs.1500. This is generally created as secondary income. If you are little worried about investing in equity, you can invest in this scheme and move such interest to mutual fund schemes as SIP. This way your principal is safe and returns are invested in growth investment options..
8) Initial Public offering
In IPO the public is invited to buy the shares of a company. You can purchase the shares before the company gets listed on exchanges. Once it gets listed, then the stock price changes according to market conditions. These market conditions are dictated by the company’s performance, future potential, management, and other factors. If you invest in the right company, then your investment will be of low risk. You can keep reviewing IPOs in our blog where we provide pros and cons. This way you would get unbiased investment advice.
You may also like: Best SIP Investment Plans to invest in 2020
9) Real Estate
Real Estate is one of the fast-growing sectors in India right now. Retail investments are one of the safe investment options. With increasing property prices, the returns will be very high. You can invest in Commercial or Residential properties or invest in Real Estate Mutual Funds. While it might not be every youngster’s cup of tea, you can collaborate with builders and partner with them. You can then start by investing a small percentage with the total project and receive the same rate of profit from the gross.
If you wish to invest in gold for utilizing them in the future for your spouse or to your mother or sister, investing in gold could be a good idea. As indicated in a couple of our earlier articles, one can invest in sovereign gold bond scheme which can fetch you interest rates of 2.5% per annum and maturity value of equivalent value of gold after 7 years.
If you enjoyed this article, share it with your friends and colleagues through Facebook and Twitter.
- Kotak Banking & Financial Services Fund – NFO Details and Review - February 4, 2023
- Mirae Asset Flexi Cap Fund NFO – Should you invest or Avoid? - January 31, 2023
- 5 Best Large Cap Mutual Funds to invest in 2023 - January 27, 2023