Investment schemes for young investors

Here are some investment schemes for young investors to grow their money.
4 mins
12 Oct 2022

Wealth is not generated overnight. To be financially independent and in a good place, individuals must start young. The earlier they start the better they can earn. This means developing savings and investing habits early on in life. The millennial generation now forms a majority of the workforce. This means they will be building families of their own and will have to manage finances independently as their parents did. To take such steep steps one should have their finances in place. Only saving will not help in growing wealth, investing it in the right tool will. This requires research and patience. But to make it easier, here is a list of a few of the investment options that young investors can consider choosing.

• Direct Equity
This investment option is entirely based on market movements and is very volatile. It is a high-risk high-reward kind of investment tool. Young investors can park their money in company-owned stocks. This is like investing in the company. If the company does well the stock does well, and the investor can earn generous returns much more than fixed income instruments like the FDs. However, if the company does not perform well the investor is at risk of capital loss. While investing in this asset class doing your due diligence is crucial.

• Mutual Funds
A mutual fund is a shared investment where multiple investors invest in a company’s stocks or bonds. You can earn the highest possible returns at a lower risk. Every investor owns units, which is a share of the holdings of the fund. The income generated from this investment is distributed between the investors. The risk depends on the type of stocks or bonds that you choose to invest in.

Mutual funds are a good option for investors with all risk appetites. They have flexible tenures and high returns as it is a market-linked option. It is also a very convenient investment tool that does not require constant monitoring as the fund is managed by a professional fund manager.

Mutual funds are market-linked investment tools. By investing in these you face the potential risks of capital erosion. However, if you invest for longer tenures you can minimise that risk as well. When the market performance is optimal, you can yield great returns from this avenue.

• Fixed Deposit
The fixed deposit is a sound instrument that does not get affected by dynamic market movements. The interest rate applicable at the time of booking an FD is maintained throughout the chosen tenure, making it easier to estimate the returns at maturity. This is a perfect tool to invest in to fulfil financial goals. It is one of the safest investment options available to date. Here the investor need not worry about losing the capital at all. Bajaj Finance offers fixed deposits at interest rates up to 7.95% p.a.
A few key highlights of the Bajaj Finance FD are given below:

  • Low minimum investment amount
  • Flexible tenuresPeriodic
  • payout option Online account management and booking facility 
  • Loan against FD facility
  • High-interest ratesAssured returns

• Systematic Deposit Plan
The Systematic Deposit Plan (SDP) is offered by Bajaj Finance. This is an industry-first monthly savings plan, perfect for young investors to start saving. You can start investing with as little as Rs. 5,000 per month. Each deposit made goes towards making a new FD, which grows over time generating a handsome amount at maturity. The Systematic Deposit Plan (SDP) has two variants, the Single Maturity Scheme and the Monthly Maturity Scheme. The difference between these two is the payout frequency and the number of deposits.

The Monthly Maturity Scheme is a monthly income scheme where the investor gets the payouts every month. Every separate deposit made during the selected tenure matures at a different date like separate FDs. The tenure chosen applies to each deposit that you make. You can choose to make between 6 and 48 deposits throughout a flexible tenure of 12 to 60 months. This monthly income scheme helps you get a regular income. You can estimate your earnings even before you invest by using the Monthly Maturity Scheme calculator. This SDP calculator can help you plan your finances. This is one of the best monthly saving plans which can help in generating a regular monthly income to fund periodic expenses like rent, paying EMIs, etc.

After going through these top 4 investment avenues, young investors can now make a well-informed investment decision to grow their wealth steadily.