Investments are capable of earning money for you. Today in the market, there are many options to explore. The market is flooded with investment options today and one can put the money in many ways.
But then again, for the young people in India, it’s the beginning of their investment life. They surely don’t want to fail. Also, young people are reluctant to invest big in something so new for them and look for the best investment options to get them started.
The young people, who are considered to be naive, can become the smartest investors if given the correct information and knowledge. Thereby, in this article, we bring to you the best investment options for young people today.
When selecting an investment option you have to take care of a lot of things. These things include risk and returns. Many investors want to make investments in such a way that they get really good returns as fast as possible with minimum risks. Hence, they do not want to lose the principal money they invested.
So there are many people out there looking for the best investment options in the market.
However, the investments which yield higher results with low-risk do not exist. Find out why investing is important, the earlier you start the better gains.
In real life, risks and returns are directly related higher. The higher the risk, the higher are the returns and vice versa. So before selecting an investment option and investing it, you need to match your risk profile and the risks associated with that particular investment option.
- 1 Know your risk appetite to find the Best Investment Options
- 2 DIRECT EQUITY
- 3 Equity mutual funds – One of the best investment options
- 4 DEBT FUNDS
- 5 NATIONAL PENSION SYSTEM
- 6 PUBLIC PROVIDENT FUND
- 7 BANK FIXED DEPOSITS
- 8 REAL ESTATE
- 9 INVESTING IN GOLD
- 10 CONCLUSION – Which are the best Investment Options for you?
Know your risk appetite to find the Best Investment Options
Many of you must have heard to invest in stock markets. Everyone knows that stock markets pay you well but many people do not trust this area.
It is because of the risks. But, there is one important thing to understand that investing every extra penny that you have is not smart. Hence, your main focus should be on investing small amounts over time.
There are some investments in the market which carry high risk but have the potential to generate great investments. On the other hand, some come with low risk and therefore low returns.
There are diverse investment options today for people in India. They are divided into two categories. One is a financial asset and another is the non-financial asset. financial assets include products like stocks mutual funds and definite interest products like a public provident fund or fixed deposits in a bank. Non-financial assets include investments in gold or real estate.
So now let’s look at the best investment options for young people in India which will help gain good returns.
When you come to think of the best tools for investment, there are many options in the market
Investing in stocks is not something that everyone can do. Its because the stock market is highly volatile and there is no guarantee that you will get your returns back.
You will face many difficulties which include picking the right stock and also timing your entry and exit.
But direct equity has never failed to deliver high returns as compared to other investment options. The risk of using a high amount of your capital invested is high.
So, you should opt for the stop-loss method. In this method, you place an advance order to sell a stock at a specific price. This happens to reduce the risk to a certain extent and gives you the option to diversify across the market and sectors. Hence, it is one of the best investment options today.
Equity mutual funds – One of the best investment options
Equity Mutual Funds invest your money in equity stocks. Some rules are governing this investment option. The Securities and Exchange Board of India under the mutual fund regulations describes that it is mandatory to invest at least 65% of assets of a mutual fund scheme in equities and equity-related instruments.
You can manage your account both actively and passively. in actively traded funds, returns are dependent on your fund manager’s ability to generate returns. Index funds and exchange-traded funds are managed passively.
Equity schemes are divided into different categories depending upon the market in which they are capitalized or the sectors in which they are invested. They can be characterized as domestic wherein the stocks are invested in only Indian companies or international wherein the stocks are invested in an overseas company.
Currently, in India for 1 year, the market return is around 15%. For 3 years, the market return is around 15% and for 5 years the market return is 20%.
Many investors are not willing to take risks associated with different investment options. Hence, debt funds are ideal for investors who want steady returns.
When compared to equity funds, they are less volatile and so automatically decrease the risk associated. Debt mutual funds focus mainly on investing in securities that generate fixed interest. These include- corporate bonds, government securities, etc. Currently, for 1 year, the market return is 6.5 %.
For 3 years, the market return is 8% and for 5 years, the market return is 7.5%. If invested carefully, this may be the best investment option for you.
NATIONAL PENSION SYSTEM
This is a long term plan which focuses on retirement and hence is managed by the Pension Fund Regulatory and Development Authority in India.
Although the young people are just starting early, this may be the best investment option for young people ahead. You can easily maintain a tier-one account by contributing 1000 rupees. Earlier this was 6000 rupees.
It does not specify any one method but includes everything from equity fixed deposits, corporate bonds to government funds. The amount invested in equities through the national pension system depends on how much risk you are willing to take.
Today, the return rate for 1 year is 9.5 %. For 3 years, the return rate is 8.5% and for 5 years, the return rate is 11% years. Remember these are the returns under fund option E.
PUBLIC PROVIDENT FUND
Public provident fund is a really popular product these days. It includes 15 years and hence you get the benefit of compounding tax-free interest which increases in the later years. Also, it is considered as a safe investment option because the interest which is generated and the principal which is invested by you is supported by a sovereign guarantee.
So, owing to the low risk and good returns, this makes it to be one of the best investment options.
BANK FIXED DEPOSITS
You might have seen many members in your family investing in a fixed deposit in a bank. It’s because it is a safe choice for people investing in India. A depositor in a bank is insured up to a limit of 1 lakh rupees for both principal amount and interest amount.
These rules are set by the Deposit Insurance and Credit Guarantee Corporation. It depends on your needs what you want to opt for. You can invest monthly, quarterly, and half-yearly in them. The interest rate that you earn will be added to your income and tax rates are as per your income slab.
Currently, your house in which you are living is for your use and hence should not be ever considered as an investment. If you think real estate investment is just about a house in which you live, you are probably wrong.
Hence, the second property which you buy should be your investment. Then again, real estate investments depend on a lot of factors. One important factor among them is the location of your property.
The location of a property is one such thing that will determine how much rent you can earn from that property and the value of your property. Real state, when compared to other investment options are illiquid and also get regulatory approvals. This happened after the introduction of the real estate regulator.
Now, real estate investment not only means physical property. You can try investing in real estate notes. This means that you could invest money into anyone’s project and then you get money as a dividend. Obviously there are many risks associated with it.
Also, you need to trust the person owning the property a lot.
INVESTING IN GOLD
Possessing gold is a great thing in the form of jewelry but there are many concerns which include the safety of the gold you keep and also the high cost of gold. Additionally, there are making charges which may range from 6 % to 14% in some cases and may go as high as 25% if you are get any special jewelry design made.
Many of you might be willing to buy gold coins so for you you the best option can be owning paper gold by gold ETFs. They are most cost effective.
So, buying and selling take place with gold as an underlying asset. You can also invest in sovereign gold bonds for owning paper gold. Hence, we consider it one of the best investments for young people.
CONCLUSION – Which are the best Investment Options for you?
To ensure a stable investment you need to do thorough market research for the best options. Also keeping in mind the returns associated with the investment option and the risks.
We need to make an informed decision because everyone who is putting his money in an investment is expecting returns but, then again some or all of them do not get what the actually invest.
When some markets go up others come down, you surely don’t want to be the person who’s investment crashes.
Hence, it is a wise decision to do thorough market research first and then make an informed decision. Beginners and young Indians need to ensure that after this is done, they choose the best investment option for young people.
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