Save and Invest Young

Save and Invest Young: Best Investment and Saving Choices

With shift in the dial of time, from millennials to now GenZ. The world saw a swift shift in every aspect of a layman’s life. Since the time we upgraded from telephones in few households to cell phones in almost every hand, the world became more bigger, connected and the exposure it brought is colossal. The youth of the world became the warriors with the technological upgradation being their Astras. There is no denying the world is pacing much faster and youth is the keeper of that pace. Now the nature and mottos of life has changed from bear to bull. Not only the statistics show how the millennials and GenZ are earning at much younger age compared to the prior generations but with books from experts like Robert Kiyosaki and Morgan housel bringing on the table the wisdom of money, budgeting, finance and investments and  also the uncountable podcasts and YouTube video content available on the internet bringing the exposure to the ideas of how to make better and smarter financial decisions has shown how that the ideas like ‘Investment’ which was limited to the six-figure earning corporates and businessmen or traders is no more limited. Now almost every one of the fourth people wants to invest early and smartly. After all, “the early bird catches the worm.”

 

Since the neoteric mantra for the youth today goes like:

Start early, start small, start smart and invest regularly!  

And if you want to part of the keeper of that pace the world is on and be an early bird. Here are few best investment options to start young, small and smart. No matter if the earnings you have are small, big or the nature of your investment strategy is bull or bear, if the interval of your investment is monthly, quarterly or annually or the amount you want to invest is lump sum or small units. I will try to present you with all the best options suitable to your investment needs. Now don’t be too much a bear to let go of such great opportunity of investing young, just imagine the kind of wealth you could accumulate even if you begin small but early.

1. SIPs – Systematic Investment Plan 

If you want to invest small amounts with lower risk factors and on regular intervals rather than lump sum amounts annually but want to have greater returns than FDs then this option is best on go.

SIP is an investment plan offered by many mutual funds to investors for humble beginnings in investment world. It is much safer since the amount is invested in various portfolios and in much smaller units which bring comparatively higher returns. Also, there are many types of SIPs available according to the need of investor. Some of the best SIPs to invest in 2022 are:

Source: the economic times

 

2. Certificate of Deposits (CDs) 

We often don’t consider the high-interest yielding bank accounts and CDs as our investment options due to many factors but they are indeed one of the safest and smart investments to make young or as a student especially if your nature of investment is bear. A Certificate of deposit is a time deposit, differs from saving accounts due to fixed term and a fixed interest rate availability.

A CD can be short term or a long-term investment depending on its maturity term according to need of investor. The investment in CDs can bring you the interest return of up to 7% depending on the time interval and the bank.

3. Liquid funds

Liquid fund is also a low-risk investment, which can serve as an ideal emergency fund. If you prefer money Parked in for short period of time, no drop in investment value, lower returns comparatively but safety ensured, and no fixation on period then one shall definitely opt for liquid fund. Since investing young provides you with larger time bracket and one cannot be reckless with investment, this proves to be one of the best options. Optimising return rates up to 5-6% with better safety and no fixed or known period are some pros that attract youth to such investment.

Top 5 liquid fund investment options in India 2022 are:

Source: bankoncube.com

 

4. Public provident fund 

It is a long-term retirement saving scheme devised by the central government. Investment in this scheme brings big advantages for youngsters ensuring the safety for their old age, since you can start your investment for as low as ₹500 to 1.5 lakhs and reap huge benefits, the age factor being in your court. The biggest advantage of this investment is that the interest, capital and proceeds are tax-free which is what we call EXEMPT or EEE. PPF currently offers its investors 7.1% interest return per annum (compounded annually). To know more about PPF scheme: https://www.indiapost.gov.in/Financial/Pages/Content/Post-Office-Saving-Schemes.aspx

 

5. Equity 

With the geopolitical scenario around the globe and US federal rates and pandemic hitting the world, the stock market isn’t the safest investing option since market is subdued and probably remain so for next 6 months but still if your nature is bullish and you can take the headwinds coming your way. Equity is another option of investment to consider but under professional care especially if one is a beginner. Knowing which stock to invest in and where the market is going takes skills and experience of years which one lacks as a young person hence making equity not the safest option of investment yet the most profitable if one can remain bullish in these times of hardship according to Ramesh Ramani, member BSE.

He suggests investing in stocks of technology around 30% in both large caps and mid-caps and invest around 60-70% in PSU banks and others, primarily over weighing on defence and railway companies. He suggests the youngsters that if they have invested in equity then they must remain bullish, stay invested and not to time the market. The stocks going down will remain so for coming few months looking at the world scenario but it will be back on track and one can make profits enough if choose to remain BULLISH.

Top 5 long term Indian equities to invest in 2022:

Given above options include top 5 investment options as youngsters but one must still avoid few mistakes while making investment decisions. As they say one doesn’t need to hold fire to know it burns. So, few things to keep in mind are:

• Ad-havoc investment without plan
• Falling prey to Fenix schemes
• Putting all your eggs in same basket
• Lack of patience
• Lack of investment goal
• Not knowing enough

Keeping these factors in mind and requirement of your needs/goals and options given above, one can make a hell of an investor with time, the best part- you’re starting young.

Keep calm and carry on!

Rajinder Kaur | PGDM2 | SIMER