Different investment opportunities in your 20s

“Invest for the long haul. Don’t get too greedy and don’t get too scared.”

Shelby M.C. Davis

Some wise words from a great man. Yes, it’s a piece of great advice from a visionary. This is the part where most of us go wrong. Every investment is for our profit but what is the need of starting small investments at a very young age, say your 20s or 30s.

You can read my previous article Why should you start investing in your 20s or 30s.

The answer is really simple, to utilize or take advantage of a very imperative factor, TIME.

Time is something we cannot control, once gone it's gone so make use of the time, don’t be greedy and impatient or be worried about the result and waste the time.

Long-term investments have a superior reputation of being successful always. As I mentioned in my previous article it’s the effect of compounding that shows the magic here along with the pacy development of the World.

As your age is lower, the monthly premium will also be lower. That is one big advantage you can achieve with starting investments from your 20s. But the main attraction comes when you look at your returns. Because the compounding effect is like squaring rather than simple multiplication.

Now comes the question of where to invest and what are the different opportunities to choose from? 🤔

Don’t worry guys that is what this article is focussing on. 😉

Different Investment Ideas

The present world offers you a handful of opportunities to try as your risk appetite, capability, and involvement. You can set your goals and efforts you can solely put to it and then choose the right one for you.

The younger age gives you the liberty to experiment with different methods and find the right combinations along with some advantages to take a higher risk.

Let's take a look at different investment options.

• Direct Investment in Stock Market

As you already know, I have been writing a lot about Stock market investments, its potential, and its safety.

The stock market is a potential area for investment. Frankly speaking, most of the investment methods either directly or indirectly has a connection with the stock market. So, if you have some time to study some basics that will be a huge bonus for you.

The stock market investment is not simple, you need to have a basic knowledge about it. You can pick some good quality stocks easily as such stocks will be well known.

But if you prefer higher returns a dedicated involvement in studying the market can get you some hidden gems and enormous returns. How Beginners can Safely Invest and Trade in Stock Market

With the establishment of some good Discount Brokers, it is now very easy to invest and trade in the stock market with a small brokerage. 

• Mutual Funds

One of the best investment methods with some exceptional returns available. If you don’t have time to study the stock market, then you can choose a good mutual fund.

Here a fund manager will do all the work with a price. Even though you need to pay a good price the returns mutual funds give you are not bad so that it's worth it.

There are two types of mutual funds; Passive funds(Index funds) & Active funds.

Passive funds are easy for a fund manager as he only needs to put the money by copying the indexes and doesn’t need to put his brains. This will ensure you the returns equivalent to at least the market returns.

In active funds, the fund manager puts his brain to select stocks to give you returns that will beat the market returns and help you in getting appreciable savings in the end. But here you need to be very careful and should check the fund managers past and history and other criteria and make sure of everything.

• Systematic Investment Plans (SIP)

This is the step that helps you as a starter because you won't be earning that much in your 20s. So, putting those small affordable amounts as an investment for savings later helps you in getting huge savings.

Even when you are directly investing in the stock market or mutual funds, you can resort to this method and slowly build your investments and savings.

In mutual funds, doing SIP in passive funds is a good beginning for a starter. As it will give you the market returns and the safety you needed at the beginning for the confidence.

In direct investment also you can select some potential stocks and add small quantities of that stock in every dip.

Another known SIP investment is the Smallcase. Here already made baskets are available with previous performance graph in comparison with market returns. Also expected percentage returns and volatility index is specified with the least investment amount.

You can customize yourself a basket and do SIPs in that too accordingly.

• PPF and Post Office Savings Scheme

Public Provident Fund(PPF), a long-term retirement saving scheme devised by the central government currently offers 7.6% interest. It is better to invest at the beginning of a Financial year (starting from Rs. 500 to 1.5 lakhs) to reap maximum benefits. At maturity, it can be extended further in batches of five years. The interest, capital, and proceeds are tax-free (what we call Exempt-Exempt-Exempt or EEE benefit).

The post office is a trusted place to park your money. Aside from ensuring absolute capital protection from a range of schemes like 5-year RD, POMIS, National Savings Scheme, etc. among others, they give competitive interest too. You can even open a PPF account through the post office.

• Gold Investment

Gold is considered a good investment opportunity especially to hedge. When the global markets are down in any crisis you can see the gold price moving up.

You may be remembering the shooting of gold price during the Covid affected 1^st lockdown all over the world. Now that the market regained and gold prices came down but not down to the levels just before the Covid impact.

The gold investment thus gives stability to your savings. There are different methods to invest in gold; Physical gold, Gold ETF, Digital gold, Sovereign Gold Bonds (SGB).

For starters, doing small SIPs in gold investments Digital gold and Gold ETFs are good but for the long term, SGBs are considered good. SGBs to be more productive need a little heavier investment so, consider SGBs when you become financially sound.

 

Most of the investment ideas discussed here are something a fresher can afford to do by putting ₹1000 or ₹500 or even smaller. As your salary increases, you can increase the monthly premium or try different other investment ideas too.

Also for short-term capital raising you can try Recurring Deposits(RD) in which most banks provide you about 6 to 7% returns monthly.

One thing I didn’t mention here is life insurance and health insurance. Consider these something mandatory, especially health insurance. Nowadays private companies always make it mandatory and thus you will be having one there. Health insurance will always act as an emergency fund during a health crisis helping you to not wash out your savings.

Life insurance schemes when you start at a very young age helps you reduce the premium to be paid and these are very trustable safe investment options for your future.

So what are you waiting for, try and find out good investment opportunities for you 😉