Youth is a time for us to enjoy our life to the fullest. Although there is nothing wrong with it, many of our young adults ignore the most important aspect of their life during this time, which is the financial side. Starting investments as soon as you start earning may seem to be a little difficult at this age, but you will be thankful to yourself by the time you reach your 30s. Many young adults do not realize the importance of early investments, and hence get caught in a difficult financial position later in life. Another advantage of investing early is that even if you go wrong in your investing venture, you will have ample time to correct your mistakes and start over again. So, to help you with this, here are some wise investment ideas for young adults who have just started earning and are seeking good financial returns.
This is the easiest and the most risk-free way of investing. Although having fixed deposits may not be possible for young people, you can opt for recurring deposits. It will be the best way for you to accumulate your savings for the long term.
Mutual funds are one of the best ways to start your investment journey, as they are professionally managed, provide low-cost investment options, and are transparent and flexible. Regularly investing a fixed sum of money will help you develop a habit of regular saving and investing, helping you build a strong financial discipline in the long run. Mutual funds start at an amount as low as 500INR, thus allowing you to create long-term wealth.
This is the traditional method of investment that every generation swears by. Buying a home can be the best investment but there are certain factors that heavily affect this. These factors include the duration of your residence, the current housing market, current interest rate environment, rental prices, and most importantly your personal financial situation. Hence, investing in a house is a big no if you have a tight financial position, but once it gets better, investing in housing and property can be your best investment ever. However, you can still invest in smaller real estate like shops and other such properties. Renting it out can be a plus point.
Public Provident Fund
PPF is another wise investment method devised by the Indian Government. It offers high-interest rates and is a tax-free saving. It is a long-term investment option and the capital, interest and proceeds at maturity are all tax-free. So, it’s a win-win. Experts say that it is best to start investing in a PPF when you are young.
Another thing that comes to our minds when talking about investments is insurance. Though you might think of investing in life insurance only after getting married, like most people do, doing your life insurance beforehand can ease a lot of burdens once you get married. But before that, make yourself aware of the various insurance products and what role they play in protecting your financial future.
Now, this might seem to be a complex phrase for some, but investing in the stock market is not as difficult as you think. One thing that can make it easier for you is having an in-depth knowledge of the market or seeking help from a reliable person who is deep into it. This can help you to directly invest in the market. But do remember that the stock market’s performance relies on the various macro and microeconomic factors, hence educate yourself about investment possibilities around these factors and decide what is best.
Unit-Linked Insurance Plans
ULIP is an investment plan that is a great pick for young adults, that offers flexible modes of investment depending on your financial needs and risk tolerance capacity, and also offers insurance coverage. It includes debt funds, equity funds and a hybrid of both.
Other short-term investments
The short-term investment plans include emergency funds, money market funds, short-term cash deposits, and savings accounts. All of these provide safety and liquidity, and the investment amount will be as per your personal financial situation.
Savings and investments are the most important decisions that you can make in your youth, which you may not realize at the time. Investing now can give your savings the time it needs to grow, so that you can reap the fruits later in life or when things go downhill for you.