College is all about happy times and memorable experiences. You learn, study hard, make new friends, plan your career, and have fun. Amid so much, thinking about investing stands no chance, especially when you live on a restricted budget.
Well, maybe it’s time to change your notion. As they say, ‘early bird catches the worm.’ The same is true for investments. When you start your investing early, it not only grows your knowledge over time but your wealth too. You can create a secure future and live a fulfilling life.
As you embark on your investment journey, let’s know how to get started and where to invest money in India for students.
Why Investing as a Student Makes Sense?
Investing as a student is easier said than done. You hardly earn any money in college, even if you do it’s not a significant amount, savings are meagre, and life is too busy to care about investments. However, investing while you are in college is the right thing as it:
- Lays a strong foundation for a secure future
- Builds good financial habits
- Encourages research and investment
- Provides the freedom to take risks
Also, you can leverage the power of compounding, which means, investing profits earned to let it grow further.
Investing as a Student: How to Get started?
College is the time when you seek ways to make extra money to meet your basic needs let alone investing. But you will be surprised to know that starting a secure investment takes a mere Rs 200-500, thanks to low-cost & low-risk investment options for students. The best part is it encourages you to think about your financial security and plan your funds.
You also get to learn and analyze market trends and consider options that have good chances of paying off. You start building your financial future before creating your career. Here are a few tips to help you get started:
- Decide on a budget to ensure a surplus.
- Pay all your debts, no matter how small it is, and cut down on unnecessary expenses.
- Open a savings account.
- Understand all the investment options to find what suits you the best.
7 Best Investment Schemes for Students in India
Here are the best investment schemes in India that students can consider to seek higher returns:
1. High-Yield Savings Account
This is the most common small investment option for students to grow their savings and earn higher interests. Opt for high-yield savings accounts that offer way higher interest rates than most conventional checking or savings accounts. You also have a certificate of deposit (CD) that gives higher interests and you are free to withdraw the amount at any time. With CD, you get a fixed interest rate if you commit money to the bank for a specific time frame.
2. Mutual Funds
Since mutual funds are flexible and diverse, they can grow your savings manifolds, making them a great investment option. If you want to take a risk, then equity funds would be good but for submissive investors, debt funds are recommended. You can also create a diverse investment portfolio by splitting your money into equity and debt funds. Students can do their own research on best short term investments or alternatively, hiring a professional financial advisor can be helpful when lacking adequate knowledge and expertise. Investing through SIP is another right choice initially as it allows you to invest a small amount at regular intervals.
Another ideal option for investing money for beginners in India is bonds. Many private and government companies raise money by issuing bonds and providing a fixed interest rate. Here, you invest the money for a specific period and on maturity, you get the principal amount along with an impressive accumulated interest. Two common types of bonds available in the market are long-term and short-term. The former offers higher returns than the latter, which makes it the safest instrument for students to invest in.
Cryptocurrency is a decentralized virtual currency that has shown great potential since the beginning and will continue to grow. Students often assume cryptocurrency to be an expensive investment hence, ignore it. Although bitcoin writing value stands at around Rs 800,000, you can buy its sub-units based on how much you are ready to invest. The minimum investment amount may vary according to the exchange but you can start with Rs 100. As it is an emerging market, you must acquire basic knowledge and expertise.
5. Deposit Schemes
Deposit schemes are perfect for students looking for safe investment options. Here, you will get a predetermined interest rate sporadically on your investment for a certain period with a specific bank. There are two common deposit schemes available for high-return investments in India:
- Fixed Deposit- You invest your money for a fixed tenure, be it short-term or long-term, and get high returns as compared to other saving plans. You can choose the time-frame based on your portfolio.
- Recurring Deposit- You invest a certain sum of money at regular intervals.
6. Share Market
Direct equities or commonly known as the share market is an investment option for risk-takers. Yes, trading is risky and involves uncertainties, especially for beginners, but it can also give higher returns if done carefully. Therefore, educate yourself and research before you enter this particular market. Know about risks, gain knowledge, and then slowly increase the stakes. Consider stocks with high growth and hold them for a longer period to earn better profits. You can also check stocks that have stood the test of time.
7. Target-Date Funds
This is also a type of mutual fund with a mix of stocks and bonds. When you invest in target-date funds, you put your money into it with a specific end date like retirement. As you approach the target date, investments will be more conventional with reduced potential risks. If you have a long-term financial goal, then go for this investment plan.
To sum up, college students who want to invest must start asap. The sooner you start your investment journey, the sooner you will understand the financial market. Also, it will ensure a better financial future. Start with a small amount and never go ‘all-in’, especially with risky options. Enhance your knowledge, talk to professionals, and then make a smart move.