Making new friends, meeting new faces, and submitting assignments on time are the biggest challenges students face after graduating from high school. Yet, while stepping away from the comfort of their space and facing the real world, it's quite astonishing they can manage time for anything else, let alone investing.
However, college is the best time to start an investment journey. With a bit of cash, any college-goer can begin building a portfolio. It will be advantageous because they will learn how to invest at a very early age, and sometimes, deal with some evitable losses without risking a massive pool of money.
3 Benefits to Start Investing At Early Age (College)
Following are some illuminating benefits of starting the investment journey at an early stage:
Inculcate the Habit of Savings
Parents provided some cash every month to spend on our day-to-day activities during our school days. For example, to buy our favorite toys or go on a picnic with friends, we skip our meals and save some money to fulfil our wishes.
Similarly, investing your money in mutual funds inculcates the habit of savings and fulfilling our life goals. For instance, if we save INR 40/- per day to invest them in mutual funds for consecutive 12-months, you might earn 16,000/- aggregately (at 5% p.a.).
Sense of Security
In India, the petrol price was INR 60/litre in 2005, followed by INR 85/litre in 2015, and currently, it's INR 110/litre. In the given example, we see that the value of a commodity increases with time. Hence, it is crucial to invest some money in mutual funds and balance our expenses.
By investing our part of the money, we efficiently attain a sense of security and plan ahead our life goals. Also, it aids in learning the value of money with a timely investing journey.
- - Promotes Individuality
Earning money gives one a sense of pride and individuality. Along with financial freedoms, investing helps students feel independent and make essential decisions on their terms.
For instance, if a college-goer wants to study further, they don't need to ask or wait for parents' approval if they have investments.
Best Tips to Help Students Start Investing
Now that you know the benefits to start investing, we are presenting the best ways to create an investment journey with ease:
Start SIP in Mutual Funds
SIP, an acronym for Systematic Investment Plans, is the best way to start an investment journey, especially for college students. One can begin investing INR 500 to INR 1500 every month and watch how money compounds itself in the stock market. Also, top mutual funds are flexible and can withdraw their investments anytime.
It's crucial to get started irrespective of how the market is performing. Depending on your life goals or aspirations, consult a financial broker to know which funds perform better and invest their savings. Having money supported also encourages the students to conduct research and stay updated.
- - Consult an Investment Advisor
Before putting your money in mutual funds, it's essential to consult an investment advisor. A good investment advisor will ask you questions related to your goals, budget, and ambitions. Accordingly, they will build an investment strategy to support your aspirations and provide you with the best alternative funds for investment.
Suppose a student is looking forward to investing money to attain higher education in foreign countries in the coming five years. Then, an investment advisor might suggest them with a hybrid investment portfolio, where 40% includes equity and 60% contains debt instruments.
Consider Gold Investments
Gold has been the preferred investment tool in India because of its liquidity. Compared to other forms of investments in equity or mutual funds, golds can help any individual raise quick cash, especially during emergencies.
Gold is considered to be the best tool to beat inflation. When the equity market crashed last year, the gold rates increased tremendously. Also, during unpredictable circumstances- like a pandemic, tsunami, or geopolitical issues- gold prices remain stable and outperform other classes of investments.
- Consider Deposit Schemes
Opening a deposit with a bank can help you safeguard your money at a pre-determined interest rate. If a student achieves lumpsum cash and doesn't want to risk with their money, they may opt for this option.
Depending upon the life goals or objective to utilize money, one can consider keeping it for a short-term or a long-term. Generally, two types of deposits are available in India:
a. Fixed Deposit
Here, the banker provides you with the flexibility to choose a certain period to keep money and get good returns.
b. Recurring Deposit
Here, one needs to invest a certain amount at regular intervals. Therefore, recurring deposit schemes are the best investment option for students who want to develop savings and invest their money without taking risks.
With proper guidance and little knowledge about the stock market, any college-goers can start building a robust investment portfolio.
The hardest part to begin your investing journey is to think of yourself as an investor. However, with all the low cost or free-trading mobile applications available today, a lumpsum INR 500 to INR 1000 per month can help you start investing.
Students needs patience and focus on the bigger picture to achieve financial goals.
