If you are in your 20’s, now is the right time to start investing. The best way to maximise your savings is to invest in the best investment options for young adults available in the market. Be aware of wrong actions and understand your short-term and long-term financial needs.
During our mid-twenties, we also enter the professional world and enter a structured 9-to-5 work cycle. We begin to take on multiple responsibilities. But when you take life seriously, you realize the importance of learning about finance and investing.
When you start earning and paying your own bills, you start realising the importance of money. In the early stages of your career, you might not be making enough money to live a luxurious life, but this is the high time, when you should be learning to manage your finances and save enough for your near future.
Once you understand your financial needs, you can make wise decisions about your investment journey.
This blog not only provides a list of the best investment options for young adults, but also briefly explains why the financial plans listed below are the best investment options for young adults in India.
Why should you start investing at a young age?
Investing is often viewed as something for older, higher-status people. However, investing from a young age offers many benefits that positively impact your financial future. Following are the reasons for you to start your investments now.
The biggest advantage of investing at a young age is compound interest. Compound interest is the interest earned on both the principal of an investment and the accrued interest. The sooner you start investing, the longer the time your investments get to accumulate, leading to greater long-term growth. Even a small amount of money that you invest regularly can grow significantly over time.
Investing at a young age offers something older investors don’t have, and that is sufficient amount of time. Time allows you to afford to take risks and withstand market volatility. As you age, you may need to adjust your investment strategy to be more conservative as you approach retirement age. Starting early gives you time to consider different types of investments and allows you to take greater risks that can lead to greater returns.
Develop Good Financial Habits
Investing from an early age also helps develop good financial habits that will benefit you throughout your life. Investing early shows you the importance of savings and a budget. It also develops discipline, perseverance and long-term thinking, which bring great benefits in all aspects of financial life.
Higher earning potential
Investing early increases your return potential over time. As your investment grows, you can reinvest your profits for even greater returns. Additionally, you can use the money you make from your investment to start a new business or invest in other opportunities that can increase your overall wealth.
5 Best Investment Options for Young Adults in India
Interest rate (Return)
Post Office Saving Scheme
6% to 8%
|Public Provident Fund||7.1% to 7.5%|
|Recurring Deposit Account||
6% to 8%
|Unit Linked Insurance Plan||
5% to 6%
|Systematic Investment Plan||
10% to 15%
Investing your money wisely is one of the smartest decisions you can make, especially when you’re young and have the time. However, with so many investment options available, it can be difficult to know where to start.
That’s why we’ve put together a comprehensive guide on the top 5 investment options for young adults in India.
1. Post Office Savings Scheme
Confidence is an important factor when planning an investment. And the most critical thing as a young adult is a safe investment. Postal Savings Bank is therefore a reliable institution to invest your money. Also, the organization is fully government-backed, thus offering comprehensive capital protection and competitive interest rates across various schemes.
2. PPF (Public Provident Fund)
PPF is a long-term austerity program developed by the Central Government of India. Not only is the interest rate high, but it’s also a great way to save tax-free. At maturity, principal, interest, and earnings are tax-free.
For this reason, PPF systems are called EEE performance systems. You can invest in a year. However, to get the most out of the PPF program, we recommend investing the maximum amount at the beginning of the year. This scheme is one of the best investment options for young adults in India.
3. RD (Recurring Deposit Account)
As a young adult, it’s important to have emergency supplies for immediate needs. Term deposits ensure that you have sufficient funds for emergencies. With a 6-month or 1-year RD, you can be sure that you have available liquidity within reach at all times. The reason RD is one of the best investment options for young adults in India, that it offers good interest rates of 6%-7% depending on the bank.
4. ULIP (Unit Linked Insurance Plan)
If you are looking for long term investment opportunities for young people, ULIP is a good choice. An investment plan that also provides insurance coverage, a unit-linked insurance plan is a flexible form of investment that allows young people to invest according to their financial needs and risk tolerance.
From equity funds to bond funds and hybrid funds that combine both, ULIP helps investors achieve high returns while providing uncertainty protection through life insurance coverage.
5. SIP (Systematic Investment Plan)
The best part about SIP is that it offers a wide range of investment options and the ability to grow with the market. Equity mutual funds are widely known for their high return potential, but many believe they also require a large amount of cumulative investment, which is not true, you can start with as low as 100 rupees per month.
This list of the best investment options for young adults is not exhaustive. However, the plans mentioned above are one of the most popular plans as a young adult.
Remember, investing wisely can not only put your hard-earned money to good use, but it can also help you create even more wealth for your financial stability.