“Ab ladka kamane laga hai” is probably the most fulfilling for anyone to hear from his/her parents but the real struggle begins when we have to financially manage our income. You might have heard about Sushil Kumar who won 5 crore in Kaun Banega Crorepati but ended up losing all the money due to improper financial management. To secure your financial future, you must be aware to keep aside a portion of your income and invest it in the right way whenever you start earning in your early 20s. Good investing habits can help you lead a stress-life, the only trick is to spend less than your earning and invest what you are left with.
But again, the major trouble is where to invest as there are so many options like trading, mutual funds, Fixed Deposits, and various other schemes. Here we are going to solve this issue for you and also give you a golden piece of advice in the end which will help you all your life.
Investment is like putting your money in a piggy bank and expecting it to grow over time, the only difference being that you regularly deposit in your piggy bank to extract the same amount after a few years but when you invest or purchase some asset, you expect it grow due to its nature and gain a profit at some later stages in your life.
What you put money or stakes into today, it will help you to create the wealth of tomorrow and thus you are able to have a stable life. We are always confused as to the right time of beginning this investment. While some have been up in the market, we have made it easier for you here with the right ideas.
The phase where you have 100 options but 1 choice to make and therefore, we will make it easy for you by giving only 10 profitable choices and you are required to select the ONE for your own life.
1. Stocks
We all know the power of stocks and having little ownership in the company through investment in the equity. Though they are volatile, they are still considered profitable options but it all depends on the market performance. By paying a small fee to any stockbroker like Zerodha, IIFL, Angel Broking, and trading well, you could earn huge profits. The type of trading depends on your own personal preference but stocks will always be the riskiest yet interesting place to invest.
2.Bonds
There is a lot of potential in bonds that are not realized by most of the Gen Z out there. Bonds are basically loans which you give out to the government and receive your repayment with interest on the same after a period of time. Here you have a variety of bands like tax-free bonds (for safety returns), National Saving Certificate Bond used for a small saving and is again a risk-free investment option. Though buying and selling aren’t that feasible in India as there is a marketplace in the USA but is still a preferable option to invest.
3. Cryptocurrencies
This investment option is gaining more traction amongst the millennials and is said to be the future with its blockchain technology of secured and encrypted solutions. Bitcoin is one of the prime examples with which you can transfer, invest and pay globally (being accepted in various locations now). There are various apps like CoinSwitch and Zebpay through which you can transact easily and it seems to be a good investment option for the future.
4. Mutual Funds
When one invests in their 20s, they have a lot of potential years to come ahead of them and one chooses mutual funds that are subject to market risk but tend to be the best investing option. You also have the option to change the fund if you see that your fund is not doing well and also at the same time, you can choose to go for a systematic investment plan (SIP) as well through your bank. So mutual funds have a wider scope and range of options for you.
5. Provident Fund
For the lower-income workers in their 20s, PPF is a good investment instrument. The invested amount in this type of fund is also tax-free up to the limit of 1.5 lakhs and comes under section 80C.
6. Corporate Fixed Deposits
You might have heard about having FDs in banks that are certainly risk-free with a certain interest rate but when you invest in the company’s FDs, they are not ascertained to be controlled by the Reserve Bank of India or they do not come under insurance benefits. The benefit is that it can give you a higher interest rate and also holding for a longer period of time but you have to be aware of the high amount of risk attached with it.
7. Real Estate
Real Estate provides a steady income and long term financial security to you with the passage of time with tax benefits and also to mortgage in the future to meet your then present needs. There is invariable appreciation in the capital investment in Real Estate.
8. Initial Public Offerings (IPO)
One of the speculative instruments, IPO is a type of public offering in which shares of a company are sold to the general public and to institutional investors. You can easily invest in IPO and make decent money by selling your stock once the company is earning profits. But you must be well aware of the company before investing your money into it so that you do not incur losses.
9. Commodities
There are a lot of commodities in India to invest like agriculture (corn, wheat), metals (gold, silver), energy (natural gas), and others. One can make huge profits or suffer heavy losses, so one must be fully aware of the procedures and count for a long term investment to play.
10. Life Insurance Plans
“Zindagi Ke Saath Bhi, Zindagi ke baad bhi.” A policy that becomes a mandatory investment for securing your life ahead. It gives you the risk cover for life as well as options to invest in stocks, bonds, or mutual funds. The only selection is to invest in the right plan which could work out for you in your 20s.
Financial independence is all that one can crave for but gaining that is a systematic process of earning, investing, and consistency. You cannot plan to grow without diversifying and investing in the right instruments at the right time in your life. The golden advice is to compare and choose the best investment out of the options mentioned above and get your financial pocket secured. Take the decision now if you are in your 20s and strike the pedal to gain profits and secure your coming future.
An article by Kalptaru Agarwal
S. Vishwa is a web marketing analyst at Finology Ventures. With 5+ years of web marketing experience, joined a Fintech company to help people to learn and earn more.