Investment Options for Beginners: How to Start Investing for Long-Term Financial Growth

Individuals just starting their investment journeys are usually young and in the initial years of their professional lives. Hence, if initiated early, they will have a profitable long-term investment horizon with time and age on their side. Additionally, young investors are likely to take more risks in the stock market as well as in their careers.

In the sections below, we will explore why you must invest early in life and what some of the best investment options are for beginners to get started.

• Young investors should start their investment journey as soon as they start earning to maximise their gains and expand their portfolios for the future.
• The five investment options for beginners and young investors include fixed deposits (FDs), mutual fund SIPs, stocks, gold, and public provident funds (PPFs).
• Depending on their earning capacity, risk appetite, and long-term financial goals, young investors and beginners can select suitable opportunities for investing.

Investing early is key to making the most of new, long-term, and trending investment opportunities. Young investors have age and time on their side to save now and then massively profit in their 40s or 50s. Especially if you have a regular income, you can simply put some of your savings aside for monthly SIPs or other suitable investment options and reap the benefits later. If it feels too much, consider smaller values at the start and increase when your earning capacity boosts.

Here are five investment options for beginners and young investors.

1. Mutual funds

Consider investing in mutual funds for long-term wealth accumulation. Professional fund managers handle the portfolios, so market knowledge is not essential, which is perfect for beginners. You can start small with just Rs. 5,000 and initiate monthly SIPs to start investing. As a young investor, focus on equity funds for high long-term returns. Additionally, explore equity-linked savings scheme (ELSS) funds for tax deductions and wealth accumulation under Section 80C of the Income Tax Act, 1961.

2. Stocks

Stock investments have the maximum potential for profits; however, they are also considered one of the riskiest forms of investment. You can select safer long-term stocks, but it is still recommended you have some stock market knowledge before jumping into the trading world. The thrill of quick profits can push you towards overtrading, which is quite risky. Hence, once you have gained the right skill set and market knowledge and mastered patience and restraint in investing, consider creating your stock market portfolio with assets that match your preferences and financial goals.

3. Fixed deposits (FDs)

As a young investor, if you want to preserve your funds and avoid risks, you can put your savings in a bank. While it is not the most profitable, depending on the current interest rates offered by the bank, a fixed deposit can assure returns even before you invest. You can simply contact your bank or use a banking app to select the tenure and initiate the investment. Additionally, if you have some capital that you can put in the bank every month or every three months, you can also consider a recurring deposit.

4. Gold

Gold is a popular investment option in India; it is often passed down generationally and considered a precious commodity to own. Young investors can consider it when they wish to diversify their portfolio or use it as a hedge against inflation in the future. Novice investors can also opt for gold securities and digital gold instead of physical gold, depending on their preferences.

5. Government schemes

One of the most popular government schemes is the Public Provident Fund (PPF). Backed by the central government and offered by nationalised banks and the post office, it comes with a lock-in period of 15 years and offers good long-term returns of around 7-9% a year. Other alternatives for this option include the Voluntary Provident Fund (VPF) and the National Savings Certificate (NSC).

There are many investment options for beginners and young investors. Depending on your risk appetite and long-term financial goals, you can effectively shortlist options and consider consulting a professional advisor for help if unsure. An early start is extremely beneficial in the long run and opens up diverse opportunities for you to thrive as an experienced investor in the later stages of your life.