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).
