When it comes to saving money, millennials aren’t stated as prime examples. Studies have shown that the lifestyle adopted by people born between 1981 to 1996 is drastically different from those born earlier, or otherwise known as the baby boomers. It is a common notion that millennials are frivolous with money and don’t realise the necessity of saving money. Millennials are often conceived as materialistic people who would spend ₹200 on a cup of coffee for a picture on social media. Be that as may, to help you out, we have curated a guide to the best investment methods in India for whoever seeks to learn about financial literacy.
Before we dive into the best investment methods that you can choose from, let's define three forms of investments that you can make.
- Low risk investments: These investments involve little to no volatility. Low risk investments have a rate of return that does not fluctuate with time. These types of investments are usually made early in one’s career so that one can reap its benefits closer to retirement. Low risk investments include fixed deposits, debentures, bonds and government saving schemes.
- Medium risk investments: These investments involve a small amount of risk. Medium risk investments are good options for people who are looking for a considerably higher rate of returns that low risk investments. Such investments involve an element of debt. Volatilities involved in these options may result in a loss of principal amount as well. Since there is no promise on the return, you may either end up losing money in medium risk investments or gaining a relatively higher return than low risk investments. Examples of such investments include debt funds, balanced mutual funds and index funds.
- High risk investments: To make high risk investments you will need to be educated about the market and be equipped with financial capabilities. The gains you can achieve from high risk investments are limitless but it is important to read the scenario and know when to invest. High risk investments include stocks, derivatives and mutual funds.
Now that you are aware of the types of risks involved in different forms of investments, we can take a deeper dive into learning more about the best investment methods that you can avail in the country.
- Mutual Funds
Mutual funds is a financial instrument that investors are usually weary about. Even though these investment options are directly related to how the market performs, their high rates of return cannot go unnoticed. Mutual funds are usually the best investment methods for those who want to invest in the market but don’t have the required expertise to do so. Your funds will be managed by a fund manager who will invest in stocks and bonds of different companies to create a return. Mutual funds are further classified into equity funds (high risk, high return investment), debt funds (moderate risk, moderate return) and hybrid funds (low risk, low returns).
- Fixed Deposits
Fixed deposit investments are the most traditional form of investments. What makes fixed deposits one of the best investment methods is its promised rate of return. Fixed deposits are ideal for beginners who have started out in their career. The only drawback of this method of investment is its relatively low rate of return. Fixed deposits are the most sought after form of investments because of their flexibility and ease. You can invest in a fixed deposit for a tenure between 7 days to 10 years. You look to save on taxes by opting to invest in fixed deposits for either a period of 5 years or 10 years.
- Stocks or direct equity
Stocks are essentially shares of a company. You make an investment in a company after doing some amount of groundwork. Investing in stocks is generally conceived as an investment that entails a large amount of risk but in the log run, they give the best returns. Before you decide to invest in stocks, it pays to know how to pick the right stock and when to enter/exit the market.
- Public provident funds (PPF)
Public provident funds are considered the safest long-term investment methods in India. The best part about investing in public provident funds is that it isn't taxed. The minimum amount of time you will have to invest in a PPF is 15 years. However, if you are in need of funds, you can withdraw money from your PPF after 6 years. You can start investing in a PPF with amounts as low as ₹500.
- Invest in gold
Gold is an investment that has the lowest probability of diminishing in value. Investing in gold may not sound as exciting as many other options but it may be the smartest move for millennials. You can purchase gold jewellery as per your budget, fashion needs and then store it away safely in your locker. With time, gold’s value will appreciate and you will reap the benefits of your investment.
You can use gold available at home when you have an emergency cash need and do not want to forego any asset. You can pledge the gold and avail a loan amount against it. This is why buying gold is an excellent investment option for millennials as the gold loan process is fairly faster, simple and accessible when in need of sudden financial assistance.
Rupeek’s gold loan is one of the best options for millenials. Rupeek requires a low criteria for eligibility of gold loan, minimal documentation and zero waiting periods. Disbursing loans with doorstep KYC and gold evaluation are the USPs of Rupeek which make it a crowd favourite to avail gold loans. Rupeek has an online gold calculator that helps you assess the interest rates and EMI repayable for the loan amount required. This enables complete transparency as the amount to be repaid is displayed upfront and there are no hidden or additional charges beyond the calculated amount. Rupeek ensures that your gold jewellery remains safe in a bank locker nearby and is returned in perfect condition during loan closure. Loan amount from 15,000 to 1 crore is given depending on the borrower’s needs and repayment abilities. This feature can come in handy for young adults to seek a gold loan to meet big or small financial needs.